#166: Chamber of Deputies greenlights asset segregation bill
Plus: Worldcoin officially launching in Brazil; Binance recovers funds from Capitual dispute
Olá pessoal!
Welcome back to 🇧🇷Brazil Crypto Report for the week of November 11-15, 2024.
After a few months in the doldrums things are finally moving again. Bitcoin is hitting new all-time highs seemingly everyday, Drex Phase 2 is showing some progress and we have some noteworthy developments on the regulatory front in Congress, the Central Bank and the other relevant agencies.
2025 is shaping up to be an interesting year!
Questions? Comments? Hate mail? Just want to say hi? Feel free to shoot me a note on Telegram @AaronStanley and lmk what you’re up to. Also feel free to hit me up on Linkedin
✋ Before you read on, make sure you register for ABCripto’s Criptorama 2024 event on Nov 19-20 in Sao Paulo before tickets run out! The team has just released the full program and features a great lineup of speakers and sponsors discussing crypto adoption and policy issues in Brazil
🔎 What’s in this week’s BCR?
Binance recovers R$430 million that had been locked for two years due to a dispute with Capitual, its former payment processor in the country
Sam Altmans’ Worldcoin re-launches in Brazil
Asset segregation bill approved by Chamber of Deputies
Thanks for reading and have a great week!
-AWS
🙌 🇧🇷Brazil Crypto Report is a free publication; if you wish to support my work you can do so by hitting the button below👇
Brazil Crypto Report is presented by
LIT Collective is the ultimate creative and design studio for Web3 companies.
Based in Brazil and serving the globe, they’ve helped more than 100 brands with user-centric branding, UX/UI design, motion, Webflow development and other creative needs.
Their experienced team will walk you through the complexities and nuances of Web3-native design and branding — helping you to grow faster, gain credibility and build brand awareness.
Check out their website, follow them on X/Twitter and Instagram, and book a free consultation to learn about how LIT Collective can help you with your creative needs.
🎙New podcasts
Lots of content this week on the podcast front! For the first episode I talked to bitcoin OG Samson Mow about his work educating governments about bitcoin adoption. He’s a former executive at BTCC (China’s first bitcoin exchange) and Blockstream, and has been heavily involved in El Salvador’s experiment and is involved in several other similar country-level projects.
Samson is one of the best minds out there at articulating the coming collision between bitcoin and nation states. He eloquently lays out the case for why all countries will embrace bitcoin as a monetary asset whether they like it or not.
We also have significant movement on Brazil’s regulatory front. The Central Bank released its long awaited draft regulations, the Receita Federal is looking to overhaul its crypto tax rules, legislation on asset segregation and stablecoins is moving through Congress, etc.
I recorded separate interviews with Tatiana Guazzelli of Pinheiro Neto Advogados and Nicky Dyskant (Fireblocks, Taxbit, among others) to find out what all of this means and how companies aspiring to be licensed operators in Brazil should prepare.
🎧 You can find Brazil Crypto Report content wherever you listen to podcasts: Spotify | Apple Podcasts | Amazon | Anchor | YouTube
Binance recovers R$430 million (US$74m) from Capitual
The funds had been blocked in a Banco do Brasil account since July 2022 amid an ongoing legal dispute between the two entities that resulted in a 22 day interruption to the brokerage’s services in the country.
Recall that Capitual was Binance’s local payment service provider before that time. The blockage of funds was related to the termination of that contract. Binance has since switched to using Latam Gateway for these services.
A Sao Paulo court granted Binance’s request to release the funds back in May, but Capitual appealed the decision and the blockage was sustained.
The funds belonged to Binance customers in Brazil; the exchange used its own resources to cover these balances in the meantime.
Sam Altmans’ Worldcoin re-launches in Brazil
WLD, the cryptocurrency project formerly known as Worldcoin, is coming back to Brazil after soft-launching in 2023.
The famous eyeball scanning Orbs will be available in 10 locations throughout Sao Paulo, including Vila Olimpia Shopping and Shopping Metro Tatuapé. Individuals who scan their iris via the orbs receive an airdrop of roughly 50 WLD tokens — currently valued around US$2.50 each.
Rodrigo Tozzi, head of operations in Brazil for Tools for Humanity (the company behind WLD), said:
“The official launch in Brazil marks a new stage and allows Worldcoin to expand into one of the largest digital markets in the world.”
Damian Kieran, Vice President of Data Protection at Tools for Humanity, told Valor:
"Our goal as a project is basically to build the world's largest trusted network that is digitally inclusive and that helps distinguish humans from robots as AI gets closer.”
Kieran’s trip to Brazil also included meetings in Brasilia with regulators from the Ministry of Science and Technology and representatives from the National Data Protection Agency.
Anna Carvalhido, head of public policy for Tools for Humanity in Brazil, said that the company is considering contacting the Central Bank regarding participation in the Drex project:
“We have not started discussions about Drex, but we are studying it. We are committed to transparency and third-party authorities have already audited our code. We would like to have an increasing number of users.”
Carvalhido said that Tools for Humanity has not talked to the CVM regarding the status of the WLD token (ie whether it is considered a security or not). She explained:
“In our interpretation, it is a utility token. We want people to use this network for functions such as verifying identity in videos, video conference meetings and other possibilities. We do not expect the cryptocurrency’s main function to be its trading by investors.”
Valor Valor CriptoFacil Portal do Bitcoin Exame BlockNews CoinTelegraph Brasil
Asset segregation bill approved by Chamber of Deputies
Legislation that would require crypto asset brokers to segregate customer funds from their own business assets was approved by Brazil’s Chamber of Deputies on Tuesday.
This text was originally drafted by the special CPI committee on cryptocurrency pyramids that concluded around this time last year. Recall that an asset segregation was stripped out of the original enabling crypto legislation passed in late 2022. The Central Bank explored adding this rule to its regulatory framework but determined that it would be implausible without legislative approval.
Also contained in the bill is language requiring crypto brokers to have a local headquarters in Brazil. This would also apply to transfers of control, mergers and spin-offs. Companies will also need to prove the economic and financial capacity of their controllers, and the lawful origin of funds involved in the structure of these entities.
The text also requires that any transfer of national or foreign currency between a user and exchange must be made via an account under the user’s name at an institution authorized by the Central Bank to operate in Brazil.
Federal Deputy Adriana Ventura told Valor:
“The benefit of this small intervention is much greater than the loss. It brings several measures to combat fraud, including the requirement that brokerage firms be incorporated in Brazil.”
The bill will now be taken up by the Senate.
Valor Investe InfoMoney CriptoFacil Portal do Bitcoin Exame BeinCrypto
🗞Brazil Crypto News Rundown
📈 Markets
Cryptocurrency trading in Brazil surged 306% from August to September, according to data from the Receita Federal. September saw R$115.7 billion (US$20 billion) in trades, up from R$28.46 billion (US$4.9 billion) in August. (Portal do Bitcoin)
The Central Bank intends to ban privacy coins like Monero and Zcash, according to an analysis of its recently released consultation. (CoinTelegraph Brasil)
Nubank launched a new feature that allows customers to easily swap BTC, ETH, SOL and UNI for USDC on its platform. It says it will integrate more currencies at a future date. (Portal do Bitcoin) (CriptoFacil) (BlockNews) (CoinTelegraph Brasil) (BeinCrypto)
Hashdex CEO Marcelo Sampaio argued that bitcoin at US$100k will soon look “cheap” during a panel at Web Summit in Lisbon. He said:
“Bitcoin at US$ 100 thousand is very cheap in the scenario where it becomes an effective store of value, adopted by the mainstream. And it is apparently heading in that direction.” (InfoMoney)
Technical analyst Fausto Botelho said that the price of bitcoin should hit US$100,000 this year if current patterns continue. His remarks came during a post election webinar with Mercado Bitcoin. (Portal do Bitcoin)
Verde Asset Management, one of the largest asset managers in Brazil, said it accumulated a small position of bitcoin prior to Donald Trump’s election earlier this month. (Portal do Bitcoin) (Livecoins)
Brazil’s crypto investment funds surpassed US$1 billion in total assets under management. (CoinTelegraph Brasil)
B3 Digitas, the digital assets division of Brazil’s B3 exchange, and financial technology company Dimensa are partnering with an eye to offer crypto assets to Brazilian institutional investors. Recall that the CVM’s Resolution 175 last year opened the door for funds to invest directly into crypto assets as long as they are traded on a platform authorized by the Central Bank or a similar foreign supervisor. Rodrigo Galasini, director of products and business at Dimensa, told Valor:
“According to Anbima, only 27% of funds are in compliance with Resolution 175. There is still a very wide range of funds to be adapted…All types of funds can have crypto assets now and we expect a large expansion in 2025.”
Brazil’s banking sector is undergoing a major transformation, and emerging risks such as the growth of crypto assets have not been fully mapped or understood, Febraban president Isaac Sidney said during a risk management conference. (Valor)
91% of content published by financial influencers in Brazil during the first half of 2024 was about variable income, with an emphasis on stocks and cryptocurrencies, according to Anbima’s FinFluence report. Posts by influencers about sports betting increased 28% during the period (InfoMoney) (BlockNews)
Transfero has partnered with Wormhole to bring cross-chain interoperability to its assets in Latin America.
📲 Adoption
Lumx and BlindPay are partnering to create a stablecoin payment solution for international transfers. Lumx will provide the wallet infrastructure, while BlindPay will serve as the on/off ramp. Lumx co-CEO Caio Barbosa told Valor:
“There are companies that work with foreign trade, which is a very complex operation. There is a strong movement of companies in this sense to seek stablecoins to facilitate business” (CoinTelegraph Brasil)
Finance influencer Primo Rico lost R$1 million by selling bitcoin in August before the current rally began. (Portal do Bitcoin)
Ripple is working on an interoperability system to connect Drex with other digital asset networks like bitcoin, Ethereum and other CBDCs. Such an integration would facilitate the entry of foreign investment into Brazil and Brazilian investment into assets in other countries. Rafael Teruszkin, director of business development for Latin America at Ripple, said during the FGV Blockchain Day:
"We have been working in recent months to define an interoperability framework for Drex. This framework aims to allow Drex to connect with other networks in Brazil and with other Central Bank networks. In addition, there is interest in connecting all liquidity present in public networks, including cryptocurrencies, stablecoins and real assets, which are currently being tokenized in public networks, to Drex" (CoinTelegraph Brasil) (CriptoFacil)
The CVM is already operating a node on the Central Bank’s Drex network and is in talks with several other government organs to do the same, project coordinator Fabio Araujo said at the FGV Blockchain Day. He explained that the objective of Drex is to promote specialization and reduce the barrier to entry for fintechs and startups. He said:
"Making an analogy with what we use in our daily lives, it is as if the aggregation layer were Netflix or Disney Plus, which has a list of movies and series and knows the user well enough to suggest, for example, a comedy that they will like.” (CoinTelegraph Brasil)
Bradesco is partnering with two competitors - Itau and Banco do Brasil - to test loans with RWA tokens based on bank deposit certificates. George Marcel Smetana, innovation specialist at Bradesco, said:
“Loans with CDBs as collateral have practically zero risk, since the asset is highly liquid. Our goal is to allow the use of any CDB, regardless of the issuer.” (CoinTelegraph Brasil)
Santander Brasil is working on three use cases for the second phase of the Drex pilot, including the tokenization of decarbonization assets, tokenization of automobiles and tokenization of debentures. The most novel is a CBIO, a green asset developed by the Ministry of Mines and Energy issued by biofuels producers. As it currently trades in only an over-the-counter fashion, tokenizing this asset should make it more freely tradable and liquid. Jayme Chataque, manager of digital assets and blockchain at Santander, said:
“Access to CBIO is limited to the wholesale market, preventing ordinary individuals or legal entities from acquiring the asset directly.” (CoinTelegraph Brasil)
Brazil has the highest number of crypto projects in Latin America, according to Finnovista. (BeinCrypto)
Glauber Contessoto, aka “SlumDoge Millionaire”, is now a millionaire again due to the recent DOGE appreciation. He famously became rich from investing in Dogecoin in 2020, only to ride that down during the bearmarket. (Livecoins)
🏛 Policy, Regulation and Enforcement
Police from Sao Paolo and Goias arrested four suspects involved in a cryptocurrency investment fraud scheme. (Portal do Bitcoin)
SuperEx, the exchange that listed Beefund’s BEEB 2.0 token, said that it will remove the assets from the platform because the team behind it “may be involved in actions that harm users’ interests”. It stated:
“To protect users’ rights, we have decided to no longer support the BEEB token and place it under observation. As soon as the BEEB project team finds another platform that can support users’ transactions, we will remove trading of this token.” (Portal do Bitcoin) (Livecoins)
BeeFund promoter Wagner Oliver said during a live broadcast that the reason the exchange has been unable to make payouts to investors is due to investors themselves sending in complaints to the SuperEx exchange and posting negative reviews about the company:
“Who is to blame? You, go in the mirror and look, then you will find the culprit. The culprit is you, not me, not A, not B, not C.” (Portal do Bitcoin)