#171: Campos Neto talks Drex, tokenization in farewell address
Plus: Binance ramps up institutional book in Brazil; Hashdex hybrid ETF approved in US
Olá pessoal!
Welcome back to 🇧🇷Brazil Crypto Report for the week of December 16-20.
Before we dive into this week’s report, I wanted to quickly address the currency situation in Brazil. If you follow Brazil politics and macro at all you have probably have seen that the Brazilian real has been in an existential battle over the last week.
The currency has depreciated heavily against the US dollar due to investor concerns over the Lula government’s fiscal policy — crashing to an all-time low of ~R$6.30 per USD on December 18. Specifically, the government’s 10 percent budget deficit, rising public debt and perceived unwillingness to adequately address the situation have shredded the market’s confidence.
Leonardo Calixto, co-chief executive of REAG Asset Management, told the Financial Times:
“The market is very pessimistic…There are no signals that this can be resolved in the short term.”
The situation isn’t exactly new as BRL is down 20% during 2024 — making it the worst-performing major currency in the world. In response, Brazilian authorities have been unloading their entire arsenal trying to stop the cascade. The Central Bank announced a 100 basis point rate hike to 12.25% on December 11 and signaled similar hikes all the way up to 14.25% by March 2025.
In response to last week’s acute events, the central bank undertook its largest intervention since 1999 by selling US$17 billion from its foreign currency reserves to stabilize the real at R$6.09. Public remarks by Lula and Finance Minister Fernando Haddad highlighting the urgency of the situation also helped to soothe the market.
Lula and his allies have spent lavishly on pensions and social benefits since returning to power in 2022, but it appears they are finally being reigned in. A $11.6 billion package of spending cuts proposed by the government has been working its way through Congress, but is at risk of being watered down significantly.
We’ll be monitoring this situation in the coming days and weeks, but the situation looks precarious at best. Patrick Esteruelas of EMSO Asset Management told Bloomberg:
“The lack of fiscal credibility is the original sin of the current market rout in Brazil. It seems difficult to catch this falling knife until they anchor the fiscal, growth cools or the market starts to think about a change of leadership.”
Now, back to crypto!
🔎 What’s in this week’s BCR?
Bradesco offers Hashdex crypto funds to clients
Rio supermarket chain tests crypto payments with Transfero
SEC approves Hashdex’s hybrid Bitcoin and Ethereum ETF
Campos Neto talks Drex in his farewall as Central Bank president
Binance’s institutional business ramps up in Brazil
Thanks for reading and have a great week!
-AWS
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🎙New podcast
This week we have two can’t miss interviews! The first is with Guilherme Nazar, who is Binance’s VP for Brazil and the Latam region. We talk about Gui’s experiences bringing Uber to Brazil and now his work leading Binance’s growth and operations in the region.
I also talk to David Lawant, head of research at institutional prime brokerage FalconX, about post-US election market trends — most notably the surge in liquidity that we’ve seen pour into crypto markets. David argues that we could be seeing a similar setup to what we saw in October 2020 prior to the previous bull run.
🎧 You can find Brazil Crypto Report content wherever you listen to podcasts: Spotify | Apple Podcasts | Amazon | Anchor | YouTube
Bradesco offers Hashdex crypto funds to clients
Bradesco, one of Brazil’s largest banks, is offering cryptocurrency investment fund products to its clients via brokerage Agora Investimentos.
The Hashdex 40 Nasdaq Crypto Index, which allocates 40% to crypto and 60% to fixed income assets, and the Hashdex 100 Nasdaq Crypto Index — which provides 100% exposure to crypto — will be available to customers. Ricardo Barbieri, director at Agora Investimentos, said in a statement:
“We have been monitoring the growing demand from our clients for crypto assets. Including Hashdex funds in our offerings aims to meet investors' interest in diversifying their portfolios with digital assets.”
Samir Kerbage, chief investment officer at Hashdex, said in a statement:
“We believe the inclusion of Hashdex funds at Ágora is a significant milestone for the cryptocurrency market in Brazil.”
Valor CoinTelegraph Brasil BeinCrypto
Zona Sul supermarket in Ipanema tests crypto payments via Transfero
The Zona Sul supermarket chain that operates in Rio de Janeiro’s upscale neighborhoods now accepts cryptocurrencies for payment via a partnership with Transfero.
The initiative is currently being tested at the store in Ipanema, with the goal of expanding to the entire chain in the next year.
Vitor Monteiro, Zona Sul’s digital manager, explained that Transfero’s flexible checkout platform that is compatible with various types of wallets removed a large barrier to access. Customers can scan a QR code at check out and the choose the coin and blockchain network that they would like to use for payment.
The range of cryptos accepted includes majors like bitcoin and ether but also an expansive mix of stablecoins, including those pegged to the dollar, real, Argentina Peso and euro. The goal is to appeal to foreign customers and tourists who are looking for easy payment options with minimal currency swapping.
Valor CriptoFacil Livecoins CoinTelegraph Brasil
SEC approves Hashdex’s hybrid Bitcoin and Ethereum ETF
After several delays and extended reviews, the agency has approved the Hashdex Nasdaq Crypto Index US ETF to launch on Nasdaq.
The fund is expected to go live in January with an approximate split of 80% bitcoin and 20% ethereum.
Portal do Bitcoin The Block Decrypt
Campos Neto talks Drex in his farewall as Central Bank president
In his final public address, outgoing BC president Roberto Campos Neto said that “Drex is the beginning of the tokenization of the banking system.”
During the live session broadcast by the Central Bank, he said:
"Drex is basically a tokenization, the beginning of a tokenization of the banking system. Remembering that Drex is a currency where the bank blocks a deposit and issues a token on top of the deposit, so you force tokenization on the banks' balance sheets.”
He re-emphasized previous remarks in support of the idea that the financial system of the future, in Brazil and globally, will be tokenized and run on blockchain rails.
"In fact, the financial world of the future is a tokenized world, which is different. Tokenization is not a digitalization with a centralized system, it is a tokenized system of platforms where we can do things, do business, where customers can interact with each other.”
He also emphasized that the Brazilian banking system must continue moving in the direction of providing banking products in a decentralized manner.
"I had the first block that was the track to engage everyone, which is Pix. Then, I have a real-time portability and comparability block. Then, we have another block that is to internationalize these advantages and these payment speeds. Then, there is the last block that is to take and tokenize all of this, that is, to move from the centralized digital world to the tokenized world."
He added that the Central Bank’s innovation agenda — comprised of Pix, Open Finance and Drex — needs two new pillars: artificial intelligence and data — specifically enabling individuals to benefit financially from their data:
"Ultimately, we could tokenize this data and exchange it for resources, as if a person's lifelong savings were made not with money, but also with the data they produce.”
Lefosse: Stablecoin regulation “will not please everyone”
Renata Cardoso, a partner at Lefosse Advogados in the Banking, Operations and Financial Services practice argued in an interview with Exame that the Central Bank might tweak its controversial stablecoin proposals slightly but won’t be able to go much further.
Recall that the bank is proposing to regulate the stablecoins in the same manner that it regulates traditional foreign exchange.
"We have to look at the issue as something that is part of a larger issue. Historically, the country has controlled foreign exchange flows, it underwent liberalization some time ago, we are currently undergoing a phased exchange reform, and I think there is no way the Central Bank, with the exchange regulations it has, will not take a position on regulating digital exchange."
She argues that any change made to the proposed rules must be consistent with the primary objectives of the FX system. “If it is going to allow transfers to digital wallets, how can it continue to guarantee the identification of the client owner?"
Speaking to the specific provision that would prohibit stablecoin withdrawals from VASPs to self-custodied wallets, she said:
"The Central Bank can make it more flexible, but without losing elements that allow adherence to the principles of exchange control. In practice, the proposal completely changes the logic of the crypto market, because it is bringing a decentralized market to a centralized concept. It is the opposite, its nature is decentralized, and the nature of the exchange is centralized. The challenge will be to find the middle ground, and it will not please everyone."
She also argued that Brazil is among the first jurisdictions globally to tackle this question, namely due to its peculiar FX system and very large regulatory burden.
"This is our jabuticaba and we are going to raise a very unique issue. Large foreign issuers ask us about it, and they see it as a very unique movement. It is a very interesting subject. It is extremely easy to use digital assets to make international remittances, the transaction cost is infinitely cheaper, but it cannot be something marginal.”
🗞Brazil Crypto News Rundown
📈 Markets
Catherine Chen, Binance’s head of VIP clients and institutional investors, visited Brazil last week to expand the exchange’s reach with institutions like investment funds, family offices and other corporate entities. She told Valor that Brazil is a highly relevant market for its Binance Wealth platform that provides solutions for wealth managers and high-net worth individuals.
The platform uses a triangulation system whereby investors deposit funds at a financial institution and then use them as collateral for investments and margin calls in crypto assets instead of investing directly on the platform.
The volume traded by institutional investors in Brazil grew by more than 130% in the last 12 months. Chen explained:
“Brazil is one of the most important markets for the crypto sector and for Binance…The segment of independent investment agents is very strong in Brazil and plays a crucial role in helping investors diversify their portfolios.” (CoinTelegraph Brasil)
Crypto funds in Brazil saw a net inflow of US$25 million during the week of December 9-13, 4th highest globally, according to data from CoinShares. The total inflows into Brazil crypto funds for the year 2024 totaled R$1.24 billion (US$204 million). (Portal do Bitcoin) (CoinTelegraph Brasil)
Exame has an overview of the various stablecoins available to Brazilians currently.
Hashdex CIO Samir Kerbage expects altcoins to outperform bitcoin in the coming months, per his monthly newsletter. (CoinTelegraph Brasil)
Brazilians invest between 7%-35% of their assets in bitcoin and cryptocurrencies, according to a new survey by the CVM. (CoinTelegraph Brasil) (Livecoins)
Influencer Beicola da Privacy launched her own memecoin on Solana. (CriptoFacil)
Founded by former Solana leaders Diego Dias and Fillipe Trentin, Sunrise Ventures looks to boost blockchain and AI projects in Latin America with R$60 million in funding. (CoinTelegraph Brasil)
Mercado Bitcoin predicts that bitcoin will surpass US$200,000 by the end of 2025. (CoinTelegraph Brasil) (BeinCrypto)
Influencer Renato Trezoitao predicts that the price of bitcoin could reach US$600,000 this cycle. (Livecoins)
📲 Adoption
More than 150,000 Brazilians have registered with World, the protocol that uses the Worldcoin cryptocurrency, in less than a month. (CoinTelegraph Brasil)
UCLA blockchain faculty member Alex Nascimento has joined the Mercado Bitcoin board of directors. (Portal do Bitcoin)
Brazil ranked 9th in the 2024 Electric Capital Crypto Developer report, with 2.5% of all crypto developers globally based in Brazil. (CoinTelegraph Brasil)
Meta announced the addition of a Pix key button for Whatsapp users in Brazil. (CoinTelegraph Brasil)
Mercado Bitcoin announced a new promotion that will reward one user with a trip to France to watch the Paris St. Germain vs Manchester United match. (CoinTelegraph Brasil)
Early Brazilian bitcoin advogate Daniel Fraga’s fortune is worth US$2.3 billion today, BlockTrends estimates.
Porto Alegre received its first crypto and NFT-themed theater. (Livecoins)
Mercado Bitcoin and Bitybank received Reclame Aqui awards for their excellent customer service and prompt handling of complaints. (Livecoins)
Renata Petrovic, head of innovation at Bradesco, spoke at length on the Exame Future of Money podcast about the bank’s work in the Drex pilot.
Financial influencer Tiago Reis closed the position in his bitcoin trade against MicroStrategy, reporting a profit of R1,300. The trade became the subject of jokes from the bitcoin community on X. (Portal do Bitcoin)
🏛 Policy, Regulation and Enforcement
The legal investigation against Sbaraini Capital for offering an unlicensed collective crypto investment scheme suffered a setback when it was ruled that Federal Police directly requested reports from the Financial Activities Control Council without seeking prior court authorization. The Superior Tribunal of Justice ruled that this evidence must be removed from the case.
Owner Eduardo Sbaraini was indicted in 2023 along with several partners from asset manager Titanium Asset (Valor) (Portal do Bitcoin)
Civil Police in Piaui arrested a 33 year-old man suspected of carrying out 92 cryptocurrency scams that resulted in R$20 million (US$3.6 million) in losses. (Portal do Bitcoin)
A Rio de Janeiro court denied a request by Glaidson Acacio dos Santos — aka Pharaoh of Bitcoins — to be transferred from his current prison in Parana to one in Rio de Janeiro. (Portal do Bitcoin)
A police chief and three officers were convicted of accepting bribes from Glaidson to help him facilitate his GAS Consultoria crypto pyramid scheme. (Portal do Bitcoin) (BeinCrypto)
Embattled crypto investment scheme BeeFund has returned as the BinexFund platform, which is promising fixed returns to investors via investments made via famous and traditional companies like e-Toro, e-Trade and Webull.
Recall that BeeFund, which promised returns up to 12.75% per day, froze customer withdrawals earlier this year. Portal do Bitcoin claims to have received more than one thousand emails from customers who are unable to retrieve their funds. (Livecoins)
Police in Mato Grosso arrested a man who stole R$48,000 worth of cryptocurrency from an investor via a SIM swap. (Portal do Bitcoin)
The Receita Federal seized 10 bitcoin mining machines valued at R$250,000 (US$41,000) that were suspected of being smuggled in via Paraguay. The seizure comes amid an increase in attempts to import mining rigs into the country via the Foz do Iguacu airport. (Portal do Bitcoin)
Annalice Baldini has a helpful overview of all the various developments on the regulatory front happening in Brazil currently for BlockNews
The TCU (Federal Audit Court) determined that the government must take immediate action to prevent funds distributed via Bolsa Familia assistance programs from being used in online betting websites. (CoinTelegraph Brasil)
Federal Deputy Aureo Ribeiro says he wants to deepen the “usability of stablecoins”. (BeinCrypto)
The Chamber of Deputies has extended its public consultation on a bill that aims to regulate cryptocurrencies until February. (Livecoins)
The leaders of several parties in the Senate filed a request for a meeting on the cryptocurrency market, predicting “wide adoption by 2030”. (Livecoins)
Federal Police and the Rio de Janeiro prosecutor’s office executed arrest and search warrants against a suspect that used cyber fraud to withdraw R$14.7 million from a New York-based cryptocurrency exchange that also operates in Brazil. The complaint states that he exploited a vulnerability in the exchange’s system to execute more than 600 trades over a period of 10 hours (O Dia) (CoinTelegraph Brasil) (CriptoFacil) (Portal do Bitcoin)
Federal Deputy Julia Zanatta is calling for a hearing to discuss the end of cash with crypto expert and OriginalMy founder Edilson Osório Jr. (Livecoins)
Federal Police launched Operation Catwalk against an international criminal network involved in trafficking women. Victims were forced to remit funds back to Brazil using cryptocurrencies. (BeinCrypto) (Livecoins)
A Brazilian man known as the “Bitcoin Bomber” after blowing up a supermarket was sentenced to 51 years in prison. (Livecoins)
Civil Police in Rio Grande do Sul launched Operation Confraria against criminal operations in the city of Parobe. (Livecoins)