#169: Central Bank says it could walk back controversial stablecoin rule
Plus: Brazil's first tokenized cow; Itau enables BTC and ETH trading for all customers
Olá pessoal!
Welcome back to 🇧🇷Brazil Crypto Report for the week of December 2-6, 2024.
Wishing you a happy bitcoin at $100k week and much success in this upcoming bull market!
👋 If you’re new here, BCR is a newsletter and podcast platform that provides actionable intelligence for investors, operators and builders with an interest in the Brazil and Latin America digital asset ecosystem
Before we dive into this week’s news, I wanted to highlight a new accelerator opportunity from Graph Paper Capital x Crecimiento. This 12 week program will be hosted in Buenos Aires starting in January, and they are looking to invest US$250,000 in your startup. It’s a great opportunity so have a look at the application form here if you want to learn more. Application deadline is December 20!
Questions? Comments? Suggestions? Feel free to shoot me a note at @AaronStanley on Telegram or on Linkedin
🔎 What’s in this week’s BCR?
Itaú enables BTC and ETH trading for all customers
Bitcoin hits all-time high of R$626,000
Brazil gets its first tokenized cow
Central Bank says it could walk back controversial stablecoin rule
Thanks for reading and have a great week!
-AWS
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🎙New podcast
This week’s podcast interview is with Rodrigo Borges, an attorney with Carvalho Borges Araujo Advogados in Sao Paulo. We discuss the Central Bank’s proposed to rule to restrict stablecoin transfers from VASPs to self-custodied wallets and the implications this will have on crypto exchanges, businesses and users in Brazil
🎧 You can find Brazil Crypto Report content wherever you listen to podcasts: Spotify | Apple Podcasts | Amazon | Anchor | YouTube
Itaú enables BTC and ETH trading for all customers
Customers of Brazil’s largest private bank are now able to buy and sell bitcoin and ether via the Itau app. The minimum order size is R$10 (US$1.64) with a 2.5% fee.
Previously, such trading was only available to customers of the bank’s investment platform called ion. Guto Antunes, head of digital assets at Itau, explained that the ion app has seen a 300% increase in average monthly transaction volume since launching in late 2023.
Purchasers will not immediately be able to withdraw these assets to self-custodied wallets; this functionality is expected to be available in 2025 with the launch of an Itau wallet should the regulatory environment permit. This wallet should also permit the inbound transfer of bitcoin and ether from external wallets.
Antunes told Valor that the release is part of a larger “superapp” strategy that the bank is adopting.
“The vast majority of ion users already operate crypto assets and demanded a solution with a simple and secure experience. Now, with the superapp, we are looking for an audience that is eager for crypto assets and wants to enter for the first time.”
The bank plans to offer new cryptocurrencies via the superapp in 2025, including SOL, XRP and ADA, Antunes explained.
Portal do Bitcoin BlockNews CoinTelegraph Brasil Livecoins BeinCrypto
Bitcoin hits all-time high of R$626,000
Amid its recent rally, the world’s largest cryptocurrency hit an all-time high against the Brazilian real. Bitcoin is now up 200% against the real since the beginning of the year.
Brazil gets its first tokenized cow
Valda, one of 500 Dutch cows residing at the Fazenda Capao da Imbuia in Parana, is the first Brazilian cow to be tokenized.
She was registered as a unique digital asset on a secure platform that stores information about her health and well-being.
The token representing Valda can now be used by her owner to more easily access credit, via a partnership with Brazilian startup Simple Token and agtech company Cowmed. Simple Token aims to provide R$200 million (US$32 million) to rural producers by the end of 2026 using tokenized livestock as collateral.
Luiz Caldas Milano, Simple Token’s commercial director, explained:
“We register Valda's data on the blockchain, whether it is ruminating, walking, sleeping. We send a link so that the bank knows that the animal is healthy and well cared for.”
Central Bank says it could reverse controversial stablecoin rule
During a hearing in the Chamber of Deputies exploring stablecoins, a Central Bank official stated that the institution could walk back a controversial proposal that would prohibit VASPs from allowing stablecoin withdrawals to self-custodied wallets.
Renato Kyotaka Uema, deputy head of the Financial System Regulation Department at the bank, said during the hearing:
“This is a public consultation, so if there are suggestions that mitigate these risks, the technical area will act to interfere as little as possible with the market’s agility.”
Local industry is not happy
Recall that the rule was proposed in a public consultation late last month. It has been met with strong criticism from the local industry, according to CoinTelegraph Brasil.
While no crypto company has come out publicly in opposition to the rule, “the discontent is total” and a plethora of firms are working on formalizing their opposition via the public consultation process.
CT also reports that the rule “did not go over well” with traditional banks operating in crypto who argued that the proposal goes against the overall pro-crypto policies being formulated by the bank.
Money laundering concerns
Uema emphasized during his remarks before Congress that the Bank’s motivation for the proposal is related to enforcement of anti-money laundering rules:
“The transfer between these digital wallets could provide some opacity. The regulator's concern is to be as strict as possible to overcome tax and money laundering risks.”
Rafael Bezerra de Vasconcelos, a representative of Brazil’s Financial Activities Control Council (COAF), argued in support of the proposed rule — saying that this level of control is necessary to preserve an efficient value transfer system:
“If we want a sustainable market to provide a value transfer service with all the efficiency gains, but that does not attract distrust, unfortunately control is a price to pay.”
While Federal Deputy Aureo Ribeiro has introduced legislation to regulate stablecoins, Uema argued that amending the current crypto regulation law is a better option than trying to create a new law focusing on just stablecoins
“An alternative legislative strategy would be to incorporate the provisions related to stablecoins into Law 14,478/2022 itself. It seems to us that this strategy would mitigate potential legal uncertainty arising from competing or contradictory provisions between two distinct laws.”
Ribeiro’s bill calls for stablecoins to be fully backed by real assets, a prohibition on derivatives and required mandatory quarterly audits.
The discourse took place in a hearing held by the Committee on Finance and Taxation and called by Ribeiro. Representatives from Tether and Circle also testified during the hearing.
Portal do Bitcoin Valor Exame InfoMoney BlockNews
🗞Brazil Crypto News Rundown
📈 Markets
Uinvex, a CVM-regulated investment platform, made the first tokenization of a debt security in partnership with the B3 exchange. In the transaction, Uinvex raised primary funds of R$3 million for investments in solar energy company Saveon Energia. It used the tokenization platform developed by B3 Digitas. (Valor) (CoinTelegraph Brasil) (CriptoFacil) (Livecoins) (BeinCrypto)
Brazilian economists Fernando Ulrich and Joao Marco Cunha argue that bitcoin will surpass the dollar and gold as the world’s primary reserve asset. (CoinTelegraph Brasil)
Brazilian investments in cryptocurrency investment products topped R$1 billion (US$176 million) for the 2024 calendar year. (CoinTelegraph Brasil)
Crypto ETF products in Brazil now have more than 10,000 bitcoins under custody. (CoinTelegraph Brasil)
Brazilians invested a total of R$7.22 trillion (US$1.2tn) in 2024 across crypto and traditional assets. The figure is up 11% from 2023. (CoinTelegraph Brasil)
Alternative investments operator Hurst Capital distributed R$4.5 million to investors related to the sale of Solana, Bitcoin and Wrapped Bitcoin. (BlockNews) (CoinTelegraph Brasil)
Nubank customers have until Monday, December 9 to exchange their Nucoins for bitcoin or USDC. Recall that the bank killed the nucoin project and will incorporate it into a broader revamped loyalty program. (CoinTelegraph Brasil)
📲 Adoption
Visa will test its new Visa Tokenized Asset Platform (VTAP) for foreign exchange transactions in the Drex pilot, in partnership with XP. Fernando Amaral, Vice President of Solutions and Innovation at Visa Brazil, said:
“We understand that the world, the economy, will be tokenized in every way. We discuss this a lot here in Brazil, the inclusion of Drex, the pilot that we are participating in, including with our clients, and you are starting to see the case for tokenizing the economy grow in different ways. This is not just happening in Brazil, it is happening all over the world and in all countries. We believe that the world will be tokenized.” (CoinTelegraph Brasil) (CriptoFacil)
Brazilian stablecoin payments startup BlindPay is partnering with Bitso Business to facilitate cross-border transactions in the region. (Crowdfund Insider)
Mercado Bitcoin and DUX are partnering to implement a new receivables advance solution and personalized credit for influencers and content creators. The project was developed within the context of the NEXT Accelerator carried out by Fenasbac. (CoinTelegraph Brasil)
Canadian fintech Nuvei launched stablecoin payment settlement for merchants in Latin America. (CoinTelegraph Brasil)
Blockchain technology could do away with the existing notary system, argues an op-ed in Exame.
Federal Deputy Eros Biondini, author of the Strategic Bitcoin Reserve legislation, proposed that the Drex wholesale CBDC but fully backed by bitcoin. In a video on social media he said:
“I propose that Drex, the digital real, be issued exclusively backed by Bitcoin. This means that the digital real can only exist in direct proportion to Brazil’s Bitcoin reserves. With this, we will have a deflationary digital currency that respects citizens’ purchasing power and protects our economy against financial crises and sudden devaluations.” (CoinTelegraph Brasil)
Crypto bank Juno is discontinuing its operations in Brazil for its Velo product, which offered a wallet with a USDC balance. The company said that the experiment was:
“an exciting experience to explore new ideas, but it did not progress beyond the beta stage because it did not achieve the results we had expected. Because of this, Velo will be gradually closed down.” (BlockNews)
Brazil, Poland, Russia and the US are among the countries considering a Strategic Bitcoin Reserve. (Decrypt)
Four years after launching, the Pix instant payment system has surpassed cash as the most popular payment method in Brazil. (CoinTelegraph Brasil) (Livecoins) (CriptoFacil) (BeinCrypto)
Brazilian bitcoin-focused payments startup Bipa raised a US$3 million seed round led by Ego Death Capital. The firm had previously raised US$4.8 million since its founding. (CoinTelegraph Brasil) (Exame)
Pablo Marcal, a social media influencer and former Sao Paulo mayoral candidate who has been a critic of bitcoin in the past, appears to be softening his stance on the cryptocurrency. He said in a video on social media:
“I find it interesting that this thing keeps rising, rising and hitting R$600,000” (Portal do Bitcoin) (Livecoins)
Brazilian mega-financial influencer Tiago Nigro, aka Primo Rico, said in a post on social media that he is going to try to retire his son before he turns 18 using bitcoin and other financial investments. (Portal do Bitcoin) (Livecoins)
Sherlock Communications launched Domino do Bem, a platform that connects non-profits and donors through crypto donations. (Portal do Bitcoin) (BeinCrypto)
Cartesi announced a US$500,000 grants program. (BeinCrypto)
NovaDAX integrated the TON and SUI blockchains into its platform. (CoinTelegraph Brasil)
Brasil Bitcoin launched an individualized crypto bank account product integrated with Pix. (CoinTelegraph Brasil)
Brazilian real estate tokenization platform Netspaces acquired Insignia Assets. (CoinTelegraph Brasil)
98% of Brazilian companies have an AI strategy, but adoption is hindered by infrastructure, data and talent limitations. (CoinTelegraph Brasil)
AI is the “opportunity of the decade” for Latin America, according to Lufer Padilla, managing partner at IBM Consulting. (Exame)
🏛 Policy, Regulation and Enforcement
Customers of ContaRico have taken to ReclameAqui to complain that they are unable to withdraw their funds from the platform, with no official response provided. Some of the 46 complaints accuse the company, which promised 3.3% monthly returns, of being a scam. ContaRico presents itself as a cooperative platform for tokenized investments. It was one of the winners of the 2023 National Treasury hackathon and was planning to submit a proposal to the second round of the Drex pilot. (BlockNews) (Livecoins)
A Brazilian Senate committee approved a bill that would regulate artificial intelligence. The bill would prohibit companies from mining protected content for AI model training. (CoinTelegraph Brasil)
The Receita Federal has extended the comment period for a new proposed crypto taxation framework called Declaration of Crypto Assets (DeCripto). The original comment window was supposed to end on December 6; interested parties will have another two weeks to submit comment. (Portal do Bitcoin) (Livecoins)
Portal do Bitcoin published a list of 5 red flag warning signs that BeeFund was a crypto pyramid.
Federal Police and Civil Police of Amapa arrested a fugitive named Thiago da Silva Rocha, who has been under investigation since 2022 for using cryptocurrencies to swindle family members and other victims out of R$30 million (US$5 million). (Portal do Bitcoin) (Livecoins)
The Ministry of Social Security wants to prohibit recipients of retirement and pension distributions from using the funds on sports betting websites. Minister Carlos Lupi said at an event in Rio de Janeiro:
“The Social Security benefit is for the person’s subsistence. Our challenge is that we cannot intervene in private money. But since the payments are subsidized by the government, our legal team is studying the ban based on this, that there is money from the Treasury and public money was not made to enter the game.” (CoinTelegraph Brasil)