🇧🇷BCR 34 (3/3): Digital Real Takes Shape
Brazil's Banco Central selects Aave, Mercado Bitcoin, ConsenSys and TradFi giants to help design its groundbreaking CBDC
Hello yet again,
The big news of this section is that the Banco Central’s Lift Challenge Program for the Digital Real approved nine proposals to help develop use cases and technical capacity for the CBDC.
The mix of projects accepted include crypto native firms like ConsenSys, Mercado Bitcoin and Aave, along with TradFi banks like Banco Santander and Febraban and other tech and payments players like Microsoft and Visa.
Judging by the mix of projects involved here, it’s fair to conclude that the Banco Central is among the most innovative and forward thinking in the world as it relates to CBDC design and development.
Below, I also cover all of the recent news related to NFTs, gaming and metaverse in Brazil, as well as legislative and public policy developments.
Make sure you smash the subscribe button below (if you haven’t already) to stay on top of all the latest Brazil crypto news moving ahead.
Brazil’s Minister of Economy Paulo Guedes predicated the eventual abandonment of physical money and called for the Digital Real to be the single official currency of Latin America.
He made the remarks during a speech at the Brazilian American Chamber of Commerce earlier this month in New York.
He argued that a single currency for Latin America could help save fragile economies like Venezuela and Argentina.
Guedes also stated that soft currencies around the world will lose relevance as CBDC development and adoption expands. He stated:
“In four, five years, we will have a digital currency, blockchain, nobody using cash. As in China, everybody [paying] with cell phones…In a few years, there will be six or seven relevant currencies in the world, and the others will disappear through irrelevance. Even the citizens of the countries that use them will abandon them.” (Exame) (CoinTelegraph Brasil)
The Banco Central chose nine industry partners for its “LIFT Challenge: Real Digital” project to help develop the Digital Real, evaluate use cases and assess its technological feasibility.
The BC received 47 total project proposals, nearly 4x gr than expected, from 43 teams across Brazil, Germany, United States, Israel, Mexico, UK, Portugal and Sweden
Selected projects include solutions for physical retail payments, real estate and vehicle transactions, interoperability for international transactions, offline payments, assets traded on Digital Real platforms, internet of things and more. Among those selected include:
Mercado Bitcoin (with CPQD Foundation and Bitrust) - proposing use case for settlement of digitally native assets
Banco Santander Brasil - working on a delivery versus rights (DvP) project to tokenize ownership rights for real estate and automobiles
Aave - an open source liquidity protocol that proposes to create a liquidity pool for the CBDC to support retail payments
Itaú Unibanco - proposes a DvP project for cross-border payments that will establish interoperability between two or more sovereign CBDC payment networks
Febraban - the Brazil’s banking trade group proposes a system for settling financial assets linked to Digital Real operating architecture
Giesecke + Devrient - a German payment security company proposing dual offline payments system whereby the transaction executes even if both the sender and receiver are offline
TecBan (with Capitual) - an open banking and ATM operator (and owner of Banco24Horas) proposing an internet of things-based logistics solution for e-commerce
VERT (with Digital Asset and Oliver Wyman) - a tokenization project for rural financing with programmability
A consortium of Visa, ConsenSys and Microsoft - proposing a regulated DeFi platform for SME financing
Implementation phase for selected projects will begin on March 28 and run until July 27. Potential use cases being explored include smart contracts for the purchase and sale of property to ensure the transfer of title and payment occur simultaneously and rural financing applications
Initial Digital Real testing will begin later this year (without public facing interaction) and
The BC said in a statement:
"Given the large number of projects of relevance and interest for the development of the real digital initiative, the selection process sought a balance between the diversity of the portfolio of proposals submitted to the lab and the need for detailed monitoring of the chosen projects.” (CoinDesk) (The Block) (Folha de S. Paulo) (Valor Investe) (Exame)
Senator Chiquinho Feitosa introduced a bill in the Federal Senate calling for the creation of a new “Green Real” currency for Brazil that would be operated on blockchain technology. The currency would be a native token of the Brazilian Emission Reduction Market and be linked to the carbon credit industry, complete with various ways of offsetting greenhouse gas emissions. (CoinTelegraph Brasil)
The total value of banknotes and coins in circulation fell in 2021 for the first time in the history of the real, according to the Banco Central. The total value for 2021 was R$339bm (US$67bn), down from R$370bn (US$74bn) in 2020. The drop is attributed to the advancement of the digital economy and increase in the use of electronic payments systems like Pix (up 11% for the year). The BC also noted that the decrease in money in circulation would be even greater had it not been for the pandemic. (CoinTelegraph Brasil)
🎮 NFTs, Gaming and Metaverse
TIM Music Noites Cariocas, a Rio de Janeiro festival, will issue 400 NFTs as part of a new project to unite art, music and technology. “Arte nas Noites”, as the project is known, will be carried out by Brazilian crypto asset company Digitiva. (Exame) (CoinTelegraph Brasil)
The gaming division of Take4Content received a R$9m (US$1.8m) infusion to expand into crypto and the “content creator economy”. Take4Content is one of Brazil’s largest content producers. With the funds, it will focus on developing a series of NFT gaming products. (Exame)
NFT music platform Pianity raised US$6.5m in a funding round with aims of expanding company’s presence in Brazil. Pianity currently features a large number of Brazilian music artists. The round was led by Digital Renaissance Foundation, Big Brain Holdings and Longhash Ventures, with participation from IOSG, LD Capital, The SandBox co-founder Sebastien Borget, ArkStream Capital, Arweave and more. (CoinTelegraph Brasil)
Brazilian artist PV Dias launched a collection of NFTs inspired by tecnobrega. The “Amazonian Movements” series contains 10 collectibles created through manipulations fo photo and audiovisual records. Tecnobrega is an expression of music and culture in northern Brazil. (CoinTelegraph Brasil)
Brazilian social media influencer Lucas Rangel is launching a metaverse avatar with a personality that is moldable by fans and followers. Rangel has more than 60 million followers on social networks. (Exame)
A line of NFTs, issued by Moss, aimed at preserving the Amazon raised more than R$1m (US$200k) in a few hours. NFT buyers hold rights corresponding ton one hectare of land in the Amazon region and receive a digital certificate attesting to the authenticity of the forest area. (CoinTelegraph Brasil)
CoinEx, an exchange, is sponsoring Sp4ce, a Brazilian e-sports team focused on blockchain games. (Portal do Bitcoin)
The Public Ministry of São Paulo will produce a series of courses about the metaverse. (Portal do Bitcoin)
Anderson Dias, a Brazilian who has visited every country in the world, is a launching an NFT collection. Freezing Fox, as the collection is known, consists of 196 NFTs handmade by artist Adriano Bassalo, with each NFT representing a country where Anderson has traveled. (CoinTelegraph Brasil)
Blockchain gaming DAO Yield Guild Games announced it now has 10,800 students globally in its NFT gaming school. 540 of those students are Brazilian. (CoinTelegraph Brasil)
Cachorro Caramelo, a Brazilian NFT project, will donate 40% of profits to institutions that support animal welfare. (CoinTelegraph Brasil)
MoneyTimes ran a profile Orbe888, a Brazilian firm that manages NFT-based play-to-earn gaming accounts
E-Sports superstars Bruno “Nobru” Goes and Lúcio “Cerol” Lima have joined the BAYZ community, the Brazilian blockchain gaming DAO, as ambassadors. Nobru and Cerol will help teach about play to earn games, NFTs and the metaverse, particularly the economics and functioning of play-to-earn games. The two have a combined 43 million followers across their respective social media channels (CoinTimes) (CoinTelegraph Brasil)
🏛 Public Policy and Enforcement
Less than 1 percent of the R$707bn (US$140bn) in cryptocurrency transaction volume processed in Brazil in 2021 had ties to illicit or criminal activity, according to blockchain forensics firm Chainalysis. Brianna Kiernan, Chainalysis’ lead representative in Brazil, also said that the company has several confidential collaborations in the works with Brazilian government entities and crypto companies. (CoinTelegraph Brasil) (Portal do Bitcoin)
The Banco Central announced tougher rules for fintechs, subjecting them to new regulations based on their size, complexity and standards for required capital.
The new framework will begin taking effect in January 2023 and will see full implementation by January 2025.
The moves come in response to urging by the banking lobby to bring fintech regulations inline with those of the traditional banking sector. (Reuters)
Federal Deputy Kim Kataguiri introduced a bill to nullify the tax on crypto to crypto exchanges, stating that it “created a modality of taxation through the IR without any provision in the laws that deal with the tax. This completely illegal interpretation by the tax authorities exceeds their regulatory power.” (Portal do Bitcoin)
Senator Irajá Silvestre Filho, the rapporteur of the three pieces of crypto legislation in the Federal Senate, compared the utility of crypto-assets to that of Pix. He emphasized that 50 million Brazilians use Pix and that cryptocurrencies can follow along the same adoption curve. He stated at a press conference:
“It is important to highlight here that crypto-assets are also becoming a new payment method. The cryptocurrency trend is the same. It becomes another payment option, just like having a credit card, debit card, Pix, and crypto-assets also have this vocation, of becoming a means of payment in Brazil and in the world.” (Portal do Bitcoin)
The Brazilian government is gradually reducing to zero the IOF financial transactions tax on purchases made abroad, a move that should be favorable for crypto purchases on foreign exchanges using credit cards. (CoinTelegraph Brasil)
Itaú has filed a lawsuit against Mercado Bitcoin in relation to a case in which an elderly man had R$191k (US$38k) withdrawn from his bank account by an embezzler and sent to the exchange. (CoinTelegraph Brasil)
The Supremo Tribuno Federal, Brazil’s Supreme Court, upheld a lower court decision to not accept cryptocurrencies as pledges in tax proceedings. The State of São Paulo refused to accept cryptos on the grounds that they do not have the “certainty”, “liquidity” and “enforceability” necessary to be accepted as collateral. (Portal do Bitcoin)
Police in Goiás arrested a man accused of stealing R$60k worth of GPUs used for cryptocurrency mining. (Portal do Bitcoin)
Mobile operator Claro must pay for R$41,690 worth of bitcoiin stolen from a client via a SIM swap, per a court order. The judge ordered that it is Claro’s responsibility to ensure that the client’s phone number is not transferred to another SIM card without the client’s specific request. (Portal do Bitcoin)
A 30 year-old crypto investor and day trader was murdered with 26 gunshots outside of Belo Horizonte. (Livecoins)
Federal Police in Rio de Janeiro arrested seven individuals with ties to a criminal organization that invested in cryptocurrencies, in an operation dubbed “Miami Heat”. (Livecoins)
Lifetycon, an alleged bitcoin pyramid scheme, filed for bankruptcy on February 25th after ceasing to pay customers in late 2021. The company blamed bitcoin’s price drop, the Ukraine/Russia war and customers unaccustomed to the market’s volatility for its insolvency. It claims:
“The insecurities of new investors in the short term, in the face of the undeniable volatility of the current digital financial market, caused a large withdrawal and numerous withdrawals by investors, destabilizing the brokerage's systems, causing a failure in the control systems and programs, and also decapitalizing the business activity, therefore, directly affecting all the operations of the Applicant, causing the economic crisis faced by the business company.” (Portal do Bitcoin)
A consumer protection group has filed a lawsuit asking for R$17bn (US$3.4) from GAS Consultoria to reimburse former customers. GAS Consultoria was an alleged pyramid scheme operated by “Pharaoh of Bitcoins” Glaidson Acacio dos Santos. (CoinTelegraph Brasil) (Portal do Bitcoin)
Mirelis Zerpa, the Venezuelan wife of GAS Consultoria’s Glaidson Acacio dos Santos, denied that GAS operated a pyramid scheme and asserted that promised profits would be paid for with returns from investing in crypto. The assertion came in defense to a lawsuit filed by three former GAS clients seeking R$427k in reimbursements. (CoinTelegraph Brasil)
Glaidson has allegedly suspended a compensation plan for GAS Consultoria clients who lost funds, according to Zerpa’s former attorney Monica Coelho Lemos. Lemos, a former investor in GAS, also announced that she was leaving Zerpa’s and Glaidson’s defense team. Lemos stated that the reimbursement plan was held up because of GAS’s financial accounts being frozen, rather than a lack of desire to make investors whole. Lemos said during an Instragram Live session:
"At no time did we deceive anyone. There was indeed an intention, a payment plan in preparation, practically ready to be presented. We all know that Mirelis is not the administrator of the company. outside, she cannot decide it alone. I saw in Mirelis a very strong desire to pay, to honor. However, this decision did not depend only on her. And I think it was clear [who made the decision]. Given the circumstances, even At this present time, the payment plan is suspended." (CoinTelegraph Brasil)
However, Glaidson released a letter contracting statements made by Lemos (though without mentioning her by name), saying that he was “extremely disappointed” by the remarks. He wrote in the letter:
“GAS is not in default with anyone!!! There was a state intervention beyond my control, prohibiting, through a judicial decision, the company from continuing its activities... customers, that I would be 'against a payment plan'. We need to remember that I am unfairly imprisoned!!! It wasn't me who blocked anyone's capital!!!” (CoinTelegraph Brasil)
Federal Police arrested two more people suspected of being involved with GAS Consultoria in “Operation Betka”, the fourth phase of “Operation Kryptos” which resulted in the arrest of Glaidson last August. (Portal do Bitcoin)
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