🇧🇷BCR #57: Binance Taps Former Brazil Central Bank President for Advisory Role; Blockchain Rio 🔥
Plus: 🤘Rock in Rio enters the metaverse, Bitcoin trading volumes in Brazil down 21% for August
Greetings and welcome to 🇧🇷Brazil Crypto Report for the week of August 29-September 2, 2022.
To kick off, I’d like to give a special shout out to Francisco Carvalho and all of the other Blockchain Rio organizers who put in a ton of effort to deliver a pretty awesome event. This event was my first time physically in Brazil for over a year so it was great catching up with old friends and meeting a bunch of new ones!
Huge hats off also to Mauricio Magaldi who was in god mode running the Blockchain Insider stage for four days on no sleep pure adrenaline
Thanks to everyone for reading and I hope you enjoy this week’s edition!
🙏Help keep 🇧🇷BCR free! If you find this content valuable, please consider supporting the mission of building a reliable English-language resource for the Brazil crypto ecosystem 👊
Henrique Meirelles, former finance minister and Central Bank president, joins Binance as an advisor
Binance landed a massive win this weekend with the announcement that Henrique Meirelles would be joining its global advisory board. The addition comes at a critical juncture with major legislation in the works to regulate crypto businesses in Brazil.
As Portal do Bitcoin notes, Meirelles is one of the most prominent financial service executives in the country. He served as finance minister from 2016-2018 under President Michel Temer, and he was president of the Brazilian Central Bank during both terms of the Lula presidency from 2003-2011. He also worked as a federal deputy from Goiás and was Secretary of Finance for the state of São Paulo for three years.
PB also reports that Meirelles was the one of the connectors that put Binance CEO Changpenz Zhao in touch with former São Paulo governor João Doria. The two posed together for a viral picture during CZ’s visit to Brazil in March.
Bitcoin Trading in Brazil Down 21% in August
Bitcoin trading volume in Brazil fell 21% in August compared to July, marking the second consecutive monthly drop, according to data from CoinTraderMonitor. The figure is down just slightly from August 2021. Of the 31,500 bitcoins exchanged during the month, Binance accounted for 45% of the volume with BitPreço taking 13.5% of the market.
Another Round of Layoffs at 2TM/Mercado Bitcoin
2TM Group, the parent company of Mercado Bitcoin, announced this week that it is letting go of 100 employees. The move comes as part of a broader restructuring to prioritize countercyclical segments and products like asset tokenization and service infrastructure that aren’t as dependent on the price performance of cryptocurrencies
The cuts equate to roughly 15% of employees across all areas of 2TM and come just three months after it laid off 90 employees in May, when crypto markets took a stark downturn.
2TM CEO Roberto Dagnoni told Valor that the firm was betting on the approval of legislation that would regulate crypto businesses in the country. The bill was approved by the Senate in April but stalled in the Chamber of Deputies and likely won’t be reconsidered again until after the presidential elections next month.
“We expected a relevant evolution of the Brazilian regulatory environment. We structured ourselves a lot to be a fully regulated company and now we see PL Crypto being postponed.”
In a statement to InfoMoney, the company attributed some of its troubles to what it argues is an unfair playing field between local and overseas exchanges.
“The competitive environment continues to deteriorate and unfair, without the approval of the legal framework for cryptocurrency activities. As a result, players that follow the law are penalized by companies that ignore local rules.”
Dagnoni also stressed that there will not be another round of personnel cuts this year.
“We made that first adjustment at the end of May and we continue to monitor the macro scenario. It was not possible to make the signal better, which did not lead to this decision. We don't know how long this winter will last. It is a sad moment, very different from what happened last year when we were hiring [based on a strong market]…Obviously, we're making this move now so we don't have to make others. The sooner the adjustment, the better the management of the future.”
🎙Be sure to check out the latest episodes of the 🇧🇷Brazil Crypto Report podcast.
This week I chatted with Conor Brady who runs Ethereum Brasil about his upcoming Ethereum São Paulo event.
I also spoke with Guilherme Rebane who is head of Brazil and Latam at OSL - one of the largest liquidity providers and digital asset platforms for institutions.
🗞Brazil Crypto News Rundown
The crypto winter has not dampened the prospects of the cryptocurrency market for large TradFi players like Nubank, XP, Genial and BTG Pactual, Folha de S. Paulo reports. Nubank Cripto lead Thomas Fortes said:
"Cryptocurrency volatility is not directly associated with the technology's future prospects. Nubank believes in the disruptive potential of the cryptocurrency market and we are thinking about the long term based on the fact that most of our customers are interested in the subject."
Beibei Liu, CEO of NovaDax, says that despite being of Chinese origin she considers her company to be a domestic Brazilian exchange since its founding in 2018, in a wide-ranging interview with InfoMoney. She also defended the asset segregation provision in the crypto bill being considered by Congress, a point contested by many of the other overseas exchanges operating in the country.
Hashdex, the Brazilian crypto asset manager, is teaming up with a BTG Pactual subsidiary to launch a launch a version of its HASH11 ETF in Chile. It will be the first such crypto investment offering available in the country. Roberta Antunes, head of growth at Hashdex, said in a statement:
“This is a partnership for us to start testing the market in Latin America outside Brazil through our partners. Chilean investors will have access to index assets as if they were buying HASH11 in Brazil.” (Valor)
Separately, Hashdex also received authorization to list its publicly traded exchange products in the European Union with the approval of its European Base Prospectus. (InfoMoney)
InfoMoney ran a helpful piece identifying some of the pros and cons of trading crypto on exchanges vs Brazilian banks (traditional and digital), and CoinTelegraph Brasil wrote a nice comparison of BTG Pactual’s Mynt, XP’s Xtage and Nubank’s crypto platform .
Binance issued a new alert for clients that trade derivatives in Brazil. The company has come under scrutiny this year for allowing the activity, which is prohibited by the CVM, by letting customers change their preferred language and location on the app. The alert states:
“Binance, in compliance with Law 6,385/1976 and the understandings of regulatory bodies, informs that it cannot and does not offer derivative services to residents in Brazil. By proceeding to one of Binance’s platforms from another country, you are declaring that you are not a resident of Brazil and/or that you are fully aware that derivatives products that may be offered in other countries may not be considered legal in your jurisdiction.” (Portal do Bitcoin)
BlueBenx CEO Roberto Cardassi has a long history of questionable activity and claims before his exchange froze customer withdrawals last month, prompting accusations that the company was a pyramid scheme. Among his dodgy history is a claim that he attended Harvard Business School. Portal do Bitcoin reached out to Harvard directly and uncovered no record of Cardassi ever attending.
Cedae, a sanitation company based in Rio de Janeiro, is experimenting with blockchain tech for issuing carbon credits related to its tree replanting program. (BlockNews)
Recycling startup GreenPlat, which. uses blockchain tech in its supply chain for track and trace in partnerships with companies like McDonald’s and iFood, is expanding into the Brazilian water management business with its new Plataforma Azul. (Exame)
The Banco Central and Fenasbac selected eight projects for its LIFT program, with four of them using blockchain tech:
The first is Itau, which will focus on creating a decentralized finance liquidity pool that “allows for custody, currency exchange and alternative investments” and with tokens that emulate stablecoins.
Easy Hash looks to enable “Decentralized Microcredit” through the tokenization of financial assets
Lovecrypto is working on an interoperability project between the Digital Real and the Celo blockchain with a possible Pix integration
FGV has opened registration for its third annual Datathon, a competition on cryptocurrencies for undergraduate students with total prizes of R$15,000. The challenge starts on October 10 and is supported by Ripple, University Blockchain Research Initiative, Hashdex, QR Asset, GV Code, USP-UBRI and Portal do Bitcoin. (Portal do Bitcoin)
Binance Charity announced a partnership with Women in Tech to offer blockchain tech courses to 2,800 women across communities in Brazil and Africa. (CoinTimes)
Lemon Cash is giving away Lemmy NFTs to Brazilian users who download the app. (CriptoFacil)
BNDES, the national development bank, announced a program whereby it will purchase up to R$100m in tokens issued by select companies that work in the area of tokenizing carbon credits, thereby helping to create a market for these assets. (CoinTelegraph Brasil)
Ribus announced the opening of a physical store to sell digital tokens at CasaShopping in Barra da Tijuca in Rio de Janeiro. The expectation is to generate R$35m in revenue through the sale of Ribus's real estate utility token in the first 12 months. (CoinTelegraph Brasil)
The Banco Central expects to begin its first Digital Real tests this month. (MoneyTimes)
🎮 NFTs, Gaming and Metaverse
Rock in Rio will have a metaverse component called Rock in Verse that features 12 interactive spaces inspired by the host city and distributed across an island shaped like a guitar. This will allow virtual attendees to have an immersive experience from afar. The project is a partnership between the Rock in Rio organizers, Coca-Cola and A-Lab agency. Rock in Rio CEO Luis Justo said in a statement:
"We know that the physical experience is irreplaceable, but we believe that the face-to-face and the virtual can go hand in hand. As we have more people who want to come to the event than the City of Rock actually supports, we are always thinking about activations that expand the experience for this audience, who, in this way, can also participate and have some fun with the festival." (CoinTelegraph Brasil)
A band made up former rock stars will perform a concert in São Paulo exclusively for NFT holders as part of a broader conference on NFTs, entertainment and science conceived by Sthorm, a Web3 social impact group. The group is made up of ex-Guns N’ Roses drummer Matt Sorum, Billy Gibbons of ZZ Top and Sebastian Bach of Skid Row. (CoinTelegraph Brasil)
Brazilians are embracing Instagram’s new NFT integration feature. (MoneyTimes)
Victor Cezarini and Dennys Xavier of Partido NOVO are launching an NFT collection as part of their respective political campaigns. It is believed to be the first instance of a Brazilian political candidate using NFTs as part of a campaign. Xavier is running for federal deputy while Cezarini is running for state deputy in Minas Gerais. The collection is called Cezarini&Dennys and is available on OpenSea. (Portal do Bitcoin)
Brazilian startup Feel the Match is launching a commercialization platform for utility tokens that will allow fans to engage with events, artists and celebrities across sports and entertainment. (Exame) (CoinTelegraph Brasil)
Cassio Gusson of CoinTelegraph Brasil profiles some Brazilian NFT entrepreneurs and startups.
Brazilian NFT marketplace Monnos is unveiling its “Digital Brazilian Flag” collection that grants holders exclusive access to Brasil 200, an initiative seeking to carry out Brazil’s first mission to the moon. Holders of the 1,000 NFTs in the collection can have their photo on an image of the national flag that will be stored on a server on the moon. (CoinTelegraph Brasil) (MoneyTimes)
Renner, the Brazilian clothing retailer launched a new collection of clothing in the Decentraland metaverse whereby users were able to try on digital clothes. The fashion store has more than 640 stores across Brazil. (Exame)
Lojas Americanas, another Brazilian retailer, is also setting up in the metaverse. It will have a store in one of the MetaEXP servers, which is based on the gameplay of Grand Theft Auto. (CriptoFacil)
EVE DAO, formed by several women in the Brazil crypto space, sold out its initial collection of NFTs in less than 10 hours. (MoneyTimes)
Ambev, the Brazilian beer company, is hosting a career fair in the metaverse. (MoneyTimes)
11.7% of Brazilian gamers have already purchased NFTs according to a new survey by HyperX, which is owned by HP. (Livecoins)
🏛 Public Policy, Regulation and Enforcement
Senator Carlos Portinho highlighted several concerns he has with the current crypto bill being considered by Congress at the Blockchain Rio Festival. Specifically, he said he was concerned about the removal of the asset segregation provision and the CNPJ requirement - which would require exchanges operating in the country to have a CNPJ registration at the time of the law’s passage - in the current version of the bill. He also said that at this stage, he prefers to start the drafting process over from the beginning and involve more dialogue with stakeholders.
“We have to exercise participatory democracy. An innovative project like this one needs to be debated and we can do this in order to arrive at a more current text that provides more legal certainty. A text that also has a greater consensus, because I think that if it is approved it will please few and in fact, we will have more sectors displeased with the project.” (BeinCrypto)
Transfero CEO Thiago Cesar criticized the crypto legislation provisions being pushed by domestic exchanges in interviews with CoinTelegraph Brasil and InfoMoney. He pushed back on the broader approach being taken by these entities as well as specific provisions, most notably the asset segregation rule that would require exchanges to maintain customer and company funds in separate accounts. He argued that these policies will ultimately result in higher costs for Brazilian customers and that domestic exchanges like Mercado Bitcoin are attacking the wrong point in their fight against overseas giants like Binance:
“If Brazilians want to continue buying Bitcoin or another cryptocurrency at competitive prices, this will only happen with the integration of the Brazilian market with the global one”.
“If you have competition from an international exchange coming in and you want to promote something that lowers the quality of your competitor's offering, that's not beneficial to the consumer. I cannot agree with a stance in which the solution for my business to continue surviving is to reduce the quality of my competitor's offer.”
The Financial Activities Control Council (COAF) abruptly removed the channel used by crypto exchanges for reporting suspicious transactions. The agency explained that Brazilian legislation currently prevents companies from using the channel regularly and that the reporting mechanism was only being used on an experimental and provisional basis. Industry groups like ABCripto and other observers opposed the move.
The reporting channel will resume once the Crypto bill is passed by Congress and signed into law, thereby giving government institutions the authority to treat crypto companies with the same rigor “today can already be legally required of other sectors included in the Laundering Law as obliged to report operations to Coaf”. (Portal do Bitcoin) (Valor)
The CVM, Brazil’s securities regulator, has changed its positioning in the crypto regulation conversation under its new leadership. It now looks to play a more forceful role in shaping the discussion around how digital assets are regulated in Brazil. The previous leadership’s “hands-off” position was largely attributable to personnel and resource shortages, Valor Investe reports.
For example, the CVM is pushing for significant changes to the crypto bill that stalled in the Chamber of Deputies this summer, specifically the bill’s relatively narrow definition of what types of digital assets would be considered securities and therefore under the CVM’s authority. The CVM’s new positioning could hinder the bill’s chances of being passed into law, especially considering the other powerful forces involved in the lobbying process. A CVM spokesperson commented:
“CVM director João Accioly believes that the aforementioned bill is subject to specific improvements, such as the provision that deals with the definition of virtual assets…”
The Cryptocurrency and Blockchain Committee of the Brazilian Chamber of Digital Economy stressed the importance of passing crypto legislation in Brazil quickly. Binance’s Daniel Mangabeira, who heads the committee, said
“With the rapid growth of the cryptocurrency market in Brazil, it is necessary to have a regulatory framework that monitors and guarantees legal certainty in the sector's development process.” (Money Times) (CoinTelegraph Brasil)
Binance has been holding anti-money laundering and illicit finance workshops for Brazilian law enforcement authorities, including the São Paulo Public Ministry. Matt Price, a former cybercrimes expert at the US Internal Revenue Service who now heads intelligence and investigations at Binance, told Valor:
“The reason we are doing this is because we believe protection against financial fraud using cryptocurrencies is very important and has the side effect of showing that we are compliant...we are focused on protecting our customers and the crypto ecosystem at large.”
The Brazilian government was reportedly hit with a ransomware attack by the hacker group Everest. The group stole 3 terabytes of data and has put the data up for sale for US$85,000 worth of bitcoin or Monero. (CoinTimes)
The Electoral Public Ministry of Bahia is investigating a candidate who allegedly induced people to vote for him in exchange for cryptocurrency. (CoinTimes)
Legislation that would create a blockchain system for tracking gold was introduced in the Chamber of Deputies. (Livecoins)
Thanks for reading Brazil Crypto Report! Subscribe for free to receive new posts and support my work.