🇧🇷BCR #63: USDT coming to 24,000 ATMs across Brazil; Nubank to roll out loyalty token to 70 million users
🇧🇷BCR #63: USDT coming to 24,000 ATMs across Brazil; Nubank to roll out loyalty token to 70 million users
Plus: Latam is the fastest growing crypto region in the world, says Chainalysis
Ola pessoal!
Welcome to Brazil Crypto Report for the week of October 17-21, 2022. It was another big news week - in this issue I look at Nubank’s forthcoming Nucoin token, how Brazil and Latam fare in Chainalysis’s new global crypto adoption report, how USDT is coming to 24,000 ATMs across Brazil and how police have cracked down on yet another massive crypto pyramid scheme.
On a side note, I will be in Lisbon the next couple of weeks attending a bunch of different crypto events so please hit me up if you’re around. If you’re passing through, make sure you check out the FIL Lisbon conference hosted by Filecoin Foundation, and if you’re at Web Summit make sure you stop by the Filecoin booth and pick up some interplanetary swag.
Have a great week everyone,
-AWS
P.S. If you enjoy this content please consider subscribing and sharing with others who might find it informative!
Nubank to roll out Nucoin to 70 million customers in Brazil, Mexico, Colombia in 2023
The unicorn digital bank’s native coin will be distributed freely to all customers and will be used to offer discounts and perks to holders. Fernando Czapski, general manager for Nucoin, commented:
“We are opening a door to the future…Nucoin is a new way to recognize customer loyalty and encourage engagement with Nubank products.
"This project is another step ahead in our belief in the transformative potential of blockchain technology and to democratize it even more, going beyond the purchase, sale and maintenance of cryptocurrencies in the Nu app.
Nucoin itself will be built on Polygon. The bank will initially select a beta test group of 2,000 users to test the product and provide feedback. Afterwards, the token will be distributed to all customers, with the official launch expected to come in early 2023. Nubank did not specify if users would be able to cash out Nucoin, trade it on exchanges or what the initial market value of the coin would be.
Sandeep Nailwal, co-founder of Polygon, said in a statement:
“One of the largest financial institutions in the world distributing its own cryptocurrency is a strong validation of the utility that blockchain and crypto have to offer. Nubank's loyalty program, developed in partnership with Polygon, will bring the transformative benefits of blockchain technology to its customers, recognizing the changes taking place in the traditional financial world.”
Nubank is hardly the first Latam fintech to plot its own token. Recall that Mercado Libre launched its own Mercado Coin token earlier this year which has a similar loyalty mechanism. InfoMoney has a nice overview looking at the key aspects of these fintech crypto tokens.
Latam is world’s fastest growing region for crypto, says Chainalysis
Latin America received BRL$2.9tn (US$560bn) of crypto between July 2021 to July 2022, a 40% year-over-year increase, making it the fastest growing region in the world for crypto adoption. These numbers come from the 2022 edition of Chainalysis’s Global Cryptocurrency Adoption Index, released last week.
Brazil itself represents the seventh largest market for crypto adoption worldwide, receiving just under US$150bn worth of cryptocurrencies over the period.
Brazilian investors are generally more exposed to cryptocurrencies vis-a-vis other types of assets than investors elsewhere in the region. This because Brazilians tend to approach crypto more as a speculative asset, the report notes, similar to more developed markets. Notably, Brazil featured significant adoption by retail and professional investors, with transfers between US$10,000 and US$1m representing more than 60% of the total volume, whereas the rest of Latam did not surpass 40%.
Another highlight from the report is that Brazil has the world’s fifth largest Axie Infinity community, and the second largest in Latam behind Mexico.
Latam is also home to several other countries in the top 30, including Argentina (13th), Columbia (15th), Ecuador (18th) and Mexico (28th).
Chainalysis research director Kim Grauer explained at a press conference:
“We have a very large volume coming from Brazil, which makes sense with what is happening there in the financial market. Hedge funds are diversifying to adopt crypto, and there is a lot of work being done to do so strategically. Not to mention Brazil's role as Latin America's financial hub.”
Note: if you’re interested in learning more about Chainalysis’s methodology for these reports please have a listen to my podcast interview with Kim Grauer from earlier this year
Brazil was also second in the region when it comes to investing in decentralized finance, behind only Chile. This market, which includes play to earn games and NFT transactions, comprised 30% of the total crypto volume in the country.
The report also found that Binance was not surprisingly the most visited crypto site by Brazilians between September 2021 and September 2022.
USDT will be available at 24,000 Brazilian ATMs via SmartPay partnership
Brazilians will be able to access the USDT stablecoin at ATMs beginning November 3 through an arrangement with SmartPay and TecBan - which owns 24,000 ATMs in 1,000 cities under the Banco24Horas brand and has been exploring other crypto product offerings (and is a participant in the Banco Central’s Digital Real Lift program).
Using SmartPay’s Swapix service, users will be able to send USDT from any wallet to an ATM to convert to BRL, as well as deposit BRL at the ATM and receive USDT in their wallets. SmartPay previously built a connection between USDT and Pix whereby users can directly send and receive USDT payments via Pix using a QR code. SmartPay has an existing agreement with Bitfinex, which is connected to Tether, since March. SmartPay CEO Rocelo Lopes told BlockNews:
“I want to be a bank without being a bank. We want who the bank doesn't want and who doesn't want the bank it has…The (Bitfinex) partnership brings us traffic and the exchange has already put Swapix in the Fast Pay (payment feature) of its app,”
Brazilians transacted a total of US$1.4bn in USDT during the month of August, the company reports.
Tether CTO Paolo Ardoino commented:
“Adding tether tokens to ATMs across Brazil provides the opportunity to include more people in the financial system…This will bring major changes not only to the payments industry but to the entire Brazilian financial ecosystem.”
Federal Police break up R$4bn pyramid
Patrick Abrahão, a Brazilian businessman and husband of Perlla, a popular singer, was arrested in Rio de Janeiro by Federal Police over his role in a financial pyramid scheme called Trust Investing.
The arrest was part of the La Casa de Papel operation which sought to dismantle the criminal organization behind the Trust Investing scheme that raised funds from 1.3 million people more than 80 countries. The Estonia registered company allegedly offered returns as much as 20% per month and 300% annually to investors via cryptocurrency investment packages. The loss to investors from the scheme is estimated at R$4.1bn (US$790m) since it began operating in 2019. It ceased paying out money to investors in October 2021.
Two other leaders of the group, Diego Chaves and Fabiano Lorite, were also arrested. Portal do Bitcoin reports that in the days prior to the scheme’s collapse, Lorite and other executives were promising that they would be able to pay investors dividends for “many years to come”. Lorite stated on a video:
“Flamengo may lose Libertadores, its candidate loses for president, but I can guarantee: Trust will come back and it will bring joy to many people.”
Perlla has insisted that her husband is innocent.
🎙Catch the latest episodes of the 🇧🇷Brazil Crypto Report podcast.
1️⃣ Isac Costa joined to discuss the Brazilian SEC’s new guidance on crypto tokens and how this fits into the scope of crypto regs in Brazil more broadly. Definitely worth a listen if you’re on the regulatory beat.
2️⃣ Marcello Mari of SingularityDAO discusses how his AI-driven asset management platform became one of the most popular crypto projects in Brazil
3️⃣ Garrett Kinsman, co-founder of Nodle, joined to discuss his smartphone-powered Internet of Things network and how he hopes to onboard one million users in Brazil by this time next year.
🗞Brazil Crypto News Rundown
📈 Markets
Brazil is one of the countries chosen to participate in a new Mastercard program offering a white label crypto exchange for banks. The pilot program, called “Crypto Source”, aims to be bridge for Tradfi institutions looking to offer crypto trading. It will help banks comply with compliance rules, transaction monitoring and identity verification via a partnership with Paxos, a blockchain infrastructure provider. Mastercard did not specify which banks will participate, but did communicate that the service would be available via an experimental basis in the US, Israel and Brazil. Mastercard’s chief digital officer Jon Lambert told CNBC:
“There are a lot of consumers out there who are really interested in and intrigued by cryptocurrencies, but would feel much more confident if these services were offered by their financial institutions…It's still a little scary for some people." (InfoMoney)
Mynt, BTG Pactual’s crypto exchange, has added several new tokens for trading - including Chainlink, Polygon and USDC. (Crypto Times) (Valor Investe)
Mercado Pago announced a new program offering cashback on cryptocurrency purchases as part of its loyalty program. Customers who reach Level 6 in Mercado Points will be able to earn 0.5% cashback on purchases of more than R$200. At least 2 million Brazilians have purchased crypto through Mercado Pago since it launched its service in December 2021. (Portal do Bitcoin)
Mercado Bitcoin will launch an Ethereum staking service for its customers beginning on November 1, giving customers the chance to earn passive income. (Portal do Bitcoin) (Valor Investe)
Foxbit launched a new token linked to music royalties from Brazilian artists with an estimated return of 12%-20%. (CoinTelegraph Brasil)
Estar, a secondary market trading platform for tokenized shares of startups, was approved by the CVM sandbox on October 18. The product, built by SMU Investimentos, is currently operating in an experimental phase that uses demo accounts without real money. The platform is expected to be fully operational by mid-November, CEO Pedro Rodrigues said. Under the CVM sandbox program, Estar will be able to list shares of up to 10 companies. (InfoMoney)
📱Adoption
60% of Brazilian voters want to know what presidential candidates Lula and Bolsonaro think about bitcoin and cryptocurrencies, according to a new survey commissioned by Bitso and conducted by Instituto FSB Pesquisa. 3/4ths of respondents reported having heard about crypto, and 44% already own or plan to own crypto. (CoinTelegraph Brasil) (InfoMoney) (Valor Investe)
BitcoinTrade has been nominated for the "Best Crypto Broker Service” with Reclame Aqui, a consumer complaints platform with a series of awards that attempt to reward companies that have efficient service and are responsive to customer feedback. (CoinTimes)
Brazilian fintech PurpleCats launched a new app called Cobby that integrates the digital banking, crypto wallet and crypto exchange functions. (CoinTelegraph Brasil)
Mercado Bitcoin announced its MB Connect program which seeks to create partnerships with new types of tokenizers such as “learn to earn” projects, utility tokens, defi and gaming tokens, NFTs and experiential tokens. (CoinTelegraph Brasil) (Crypto Times)
Increased adoption of Pix and crypto assets helped Brazil jump three slots in the 2022 Global Innovation Index, compiled by the World Intellectual Property Organization. (Exame)
What’s the difference between Pix and the Digital Real? Exame ran a helpful article breaking down the differences between the two systems.
Banco do Brasil released a video explaining bitcoin and other cryptocurrencies on its YouTube channel.
Argentine startup Agrotoken commenced operations in Brazil last week. It is developing a tokenized system to increase access to credit for rural producers and allow individuals to get simple exposure to commodities markets. Agrotoken issues three types of tokens linked to soy, wheat and corn, which are linked to the value of the products on the international market. The tokens are validated through a “Proof of Grain Reserve” built on a multichain infrastructure consisting of Algorand, Ethereum and Polygon blockchains. (CoinTelegraph Brasil) (InfoMoney)
Former Brazilian footballer Ronaldinho Gaucho is promoting a sketchy token project called World Cup Inu that brands itself as an ERC-20 token linked to the World Cup though it is not licensed by FIFA.
Santander has begun testing a platform that facilitates the tokenization and transference of car ownership using blockchain tech. The platform is being developed in partnership with Parfin, which has its own tokenization infrastructure, within the scope of the Banco Central’s LIFT Lab - which is looking for potential Digital Real use cases. Santander, a leader in vehicle financing, has already presented the results of system simulations to the BC and will begin real trades involving cars and properties. (CoinTelegraph Brasil)
While the Digital Real is currently forecasted to launch in mid-2024, the progress of the project leads some to believe that it might go live sooner, particularly as the first prototype version is rumored to have been created last week. (CoinTimes) (Exame)
Interoperability with Ethereum and Ethereum Virtual Machine compatible chains appears to be a priority for Digital Real development. (BlockNews)
Real estate tokenization in Brazil has the potential to reduce bureaucracy and barriers to entrance to the market, CoinsPayments executive Rubens Neistein argued in an op-ed. (CoinTelegraph Brasil)
Prices of the Flamengo and Corinthians fan tokens did not change much during their Copa do Brasil championship match at Maracana stadium on October 19, though trading volume of the coins was up significantly. (Portal do Bitcoin)
70% of Brazilians have an account in both traditional and digital banks, according to a study carried out by Akamai Technologies. The number is up from just 37% in 2020, the last time the study was conducted. (CoinTelegraph Brasil)
🎮 NFTs, Gaming and Metaverse
Rock in Rio NFTs issued by Block4 are among the most traded in secondary market, according to data from CryptoSlam. (CoinTelegraph Brasil)
A new Brazilian collects created by Rough Diamonds and OneFootball sold out in just 1.47 seconds on OpenSea. (CoinTelegraph Brasil)
Havaianas, the maker of the popular Brazilian footwear, is creating an exclusive community for NFT holders. Maria Fernanda Albuquerque, global vice president of marketing, commented:
“We were the first Brazilian brand to launch exclusive products in NFTs, we have already created an island in Fortnite and promoted our Quebrada Cria collection within the game Favela X, by the NGO Gerando Falcões. Now, the time has come to take the entire lifestyle of the brand to NFTh, a community of its own and much closer to the brand, where we offer benefits and experiences with Havaianas DNA.” (Crypto Times)
Brazilian NFT startup Lumx Studios is supporting the creation of NFTs for Penta Hotels, a European hotel chain with 20 properties on the continent. The NFTs will function as the cornerstone of the chain’s loyalty program and function similar to a CRM. (CoinTimes) (BlockNews)
São Paulo Formula 1 GP is giving its NFT holders tickets to a special exhibition exploring the history of the organization. (Crypto Times)
Sherwa, a Brazilian startup, launched a new dapp called CashDash that serves as an aggregator to help players connect with play-to-earn games. (Crypto Times)
NFTs have the potential to transform credit, securities and trade finance markets for banks like Itaú, Nubank and Banco do Brasil, according to a new study by Capco Digital Lab. (CoinTelegraph Brasil)
Lula, the presidential candidate, said that he intends to regulate the game developer profession while wearing a hat of an NFT game given to him by the show sponsors. (Portal do Bitcoin)
NFTFY, a Brazilian NFT project, won a hackathon at Devon with a blockchain voting platform that uses zero-knowledge technology. (Portal do Bitcoin) (Crypto Times)
Ex Nunc Metaverse, a startup formed by a group of law and tech experts, is developing solutions to bring legal offices and institutions to the metaverse. (Crypto Times)
IPRIGHTZ, a US based startup founded by two Brazilians, is building a licensing agency for monetizing blue chip NFTs. (Exame)
Sexy magazine is celebrating 30 years in the Brazilian adult market with an NFT launch, whereby exclusive content where be marketed as NFTs to an 18+ audience. (Exame)
MMA Innovate Brasil, one of the premier marketing events in Latam, is will give out awards and certificates in NFT format at its upcoming event. (CoinTelegraph Brasil)
2/3rds of Brazilian gamers know what NFTs are, and at least 73% are “certainly” or “likely” to invest in these assets, per a survey carried out by Web3 gaming startup BAYZ. (CoinTelegraph Brasil)
🏛 Public Policy, Regulation and Enforcement
Victims of various pyramid schemes operated by “Bitcoin Sheik”Francisley Valdevino da Silva are demanding the seizure of a jet worth R$37m (US$7.2m) owned by the Sheik but currently being used by singer Wesley Safadão. The petition has been raised in a Curitiba court and came to light once other defendants realized the asset existed. Safadão, also a victim of the Rental Coins scam, is arguing that he was just as harmed as the other investors and that he received the aircraft from the Sheik as a guarantee that he would receive his money back after Rental Coins withdrawals were blocked earlier this year. (CoinTelegraph Brasil) (Portal do Bitcoin)
Fantastico, a popular Brazilian news television program on TV Globo, ran an in-depth segment showing how the the Bitcoin Sheik’s schemes operated. Authorities interviewed for the show said it functioned like a classic pyramid scheme with no actual investment, just new customers paying old ones. Federal Police delegate Filipe Hille Pace told Fantastico:
“There is no record that the values entered and trading operations were carried out, investment in cryptocurrencies. This reinforces evidence that confirms the practice of this fraud, that he did not invest the victims' money.”
The Sheik deflected blame away from himself and toward rogue employees while insisting that he has the financial resources to pay the harmed customers, telling Fantastico:
“We had several systemic problems, we had an internal audit, where this audit found a lot of fraud within the system. We have already proven this and we are going to present it in court. These are internal frauds by people who worked with us.”
Record TV was the victim of a ransomware attack on October 8. (CoinTelegraph Brasil)
ABCripto is hosting its Criptorama policy summit November 8-9 in Sao Paulo.
While not directly Brazil-related, Reuters ran an in-depth expose looking at CZ and Binance’s efforts to circumvent regulations worldwide.
Federal Police arrested Arthur dos Santos Leite and seized R$4m worth of vehicles in the sixth phase of Operation Kryptos, which commenced in August 2021 to dismantle GAS Consultoria, a pyramid scheme operated by Glaidson Acacio dos Santos, aka the “Pharaoh of Bitcoins”. (CoinTimes) (InfoMoney)
Former São Paulo governor João Doria and his son João Doria Neto met with representatives from Bitso to discuss the Brazilian crypto market according to a Linkedin post by Bitso chief regulatory officer Felipe Vallejo Dabdoub.
Banco Central director Otavio Damaso held a meeting in Washington, DC with representatives from The Blockchain Association, the primary lobby group for the crypto industry in the US. The meeting addressed “regulatory matters”, with no further details provided. (Portal do Bitcoin)
Digital bank Linker blocked the account of Michel Lopes Del Sent, a peer-to-peer bitcoin trader, and said that it will only return the funds with receipts from the Receita Federal. (Portal do Bitcoin)
The government of Paraná announced that it had received a complaint about 20 Brazilians being subjected to slave labor conditions in Cambodia. The laborers had relocated there under the promise of earning $900 a month selling cryptocurrencies to the Brazilian public. (Portal do Bitcoin)
The Curitiba city council approved a proposal to accept cryptocurrencies as a form of tax payment, following in the footsteps of Rio de Janeiro. (CriptoFacil)
The trend of Brazilian municipalities accepting crypto for tax purposes could help to improve the industry’s image in the country, experts suggest. (Exame)
Marlon Gonzalez Motta, aka “Playboy of Bitcoins”, who is accused of running multiple bitcoin scams, is now accused of keeping his ex-girlfriend in false imprisonment. (Livecoins)
💣Elsewhere in Latam
Singapore-based crypto exchange Bitget announced an exclusive partnership with footballer Messi to bolster its Latam presence. Specific details were not disclosed but the arrangement will focus on products and services related to crypto, Web3 and football. Messi commented:
“I want to thank Bitget for their enthusiasm in making me participate in the cryptocurrency world. I am confident that the two parties will be able to activate significant initiatives, as well as offer Web 3 to sports fans.” (CoinTelegraph Brasil) (Valor Investe)
Fortune Crypto ran a good article exploring the growth of crypto adoption throughout the Latam region
Bitso announced that it has surpassed six million users across the Latam region. The company says that this is the fastest it has grown since launching in 2014. (CoinTelegraph Brasil)
The Latin Grammy Awards launched its first collection of NFT collectibles on the Tezos blockchain. (Crypto Times)
NFTs featuring artwork of Refik Anadol are the focal point of a “Night in the Museums” event held in Buenos Aires. (Portal do Bitcoin)
An American named Patrick Melder is seeking to create a “Bitcoin Lake” community in the Panajachel area of Guatemala that would be similar to El Zonte or “Bitcoin Beach” in El Salvador. (Portal do Bitcoin)
40 individuals were arrested in a crackdown by Argentine police on an illegal bitcoin mining operation that used stolen electricity. The mining farm was located in the city of Quilmes. Authorities seized significant amounts of cash and mining hardware. (Portal do Bitcoin) (InfoMoney)
El Salvador president Nayib Bukele wants to pass more than 50 new laws to help drive further bitcoin adoption in the country. (CriptoFacil)
The decision to make bitcoin legal tender is considered a “failure” by 65% of El Salvador’s population, according to a study conducted in May by Universidad Centroamericana. 16.5% of respondents consider the implementation to be a “success” while 18% did not know how to respond. 75% of respondents said they did not use bitcoin in 2022 as a form of payment, whereas 25% indicated that they had. 77% said the government should stop using public money to buy bitcoin. (Exame)
Despite the Bukele’s bitcoin investments performing poorly, he remains one of the most popular leaders in the Latam region in opinion polls. (Exame)
Ariel Lozano, the creator of the Chivo wallet widely used in El Salvador, said that several other countries have sought him out to develop similar projects and to understand how bitcoin wallets work. He also predicted that another country will soon declare bitcoin as legal tender. (CoinTelegraph Brasil)
The Chamber of Deputies in Chile approved a fintech regulation bill that would regulate all companies in the country that provide financial services through technology, including cryptocurrencies. (CoinTelegraph Brasil)
Paraguay’s state-owned energy company has asked deputies to accept the president’s veto of a cryptocurrency mining and regulation bill. The veto, which occurred in late September, was overridden by the Paraguayan Senate and now goes to the lower house. (Livecoins)