🇧🇷BCR #64: Election Edition 🔥
Plus: Neymar launches NFTs and "BeastMode" metaverse; fan tokens surge in popularity ahead of World Cup
Welcome to Brazil Crypto Report for the week of October 24-28, 2022.
Quick housekeeping note: I will be in Lisbon the next weeks attending FIL Lisbon and Web Summit so please hit me up if you’re around (@AaronStanley on Telegram). 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 fun interplanetary swag.
I must admit that this week’s newsletter title is a bit of a rug pull as I don’t really have any thing novel to say about Lula’s victory in Sunday’s presidential election. I’ve held the position for some time now that the outcome of the race would not have much substantive impact on the trajectory of Brazil’s growing crypto market.
There was a reasonable argument that Bolsonaro was the best candidate for the industry using the “devil you know is better than the devil you don’t” reasoning, as well as the premise that conservatives tend to be more pro-business and anti-regulation.
But these are just generalities that didn’t mean much in this instance, especially as Lula’s former Finance Minister and Central Bank President Henrique Meirelles is now working for Binance and hinting that Lula will adopt a more hands-off economic approach as president. These are policies that extend far beyond crypto, so we will have to wait and see.
Have a great week everyone,
P.S. If you enjoy this content please consider subscribing and sharing with others who might find it informative!
Fan tokens surge in popularity as World Cup nears
Trading of fan tokens of national football clubs has surged as the world gears up for the 2022 World Cup in Qatar, as highlighted in a story by CoinDesk markets reporter Omkar Godbole. Tokens representing national clubs from Brazil, Turkey, Argentina, Spain and Peru have all seen healthy price rallies in recent weeks.
Fan tokens, typically issued by platforms like Socios and Bitci, now have a $366 million market cap globally, according to FanMarketCap - a data website powered by CoinGecko. CHZ, the native token of the Chiliz blockchain that powers the Socios fan token platform, is up 9% over the last two weeks.
Why all the hype behind these fan tokens? Some observers say it’s out of desperation for any new narrative to trade on for short term returns. Wes Hansen of Arca Capital warned retail investors against getting overly exposed, telling CoinDesk:
“There is a lot of money waiting for any opportunity to invest, which is why short-term event trading has been the only way to generate decent returns for a few months now.
These tokens just become high-speed trading vehicles that have little to no intrinsic value or functionality and will disappear once the [widespread buy] event starts to wear off.”
🎙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.
🗞Brazil Crypto News Rundown
Xtage, XP Investimentos’s new crypto platform, has enabled trading for MATIC and LINK, the native tokens for Polygon and Chainlink, respectively. Xtage launched this summer with just bitcoin and ethereum available for trading, but anticipated that it would offer 10 tokens by year’s end. Xtage CEO Marcos Horie said in an interview:
“We are working to release more digital assets in the coming months, as well as bringing new features to the app. Thus, we believe that we can greatly speed up the operation and serve even more customers who have crypto on other exchanges and want to bring it here.” (CoinTelegraph Brasil) (InfoMoney) (Valor)
MB Assets, the asset management arm of Mercado Bitcoin, reached R$1bn in assets under management as the entity looks to establish itself as a cryptobank in the Brazilian market. CEO Reinaldo Rabelo told Neofeed:
“We want to be a Brazilian cryptobank. We want the customer to see MB as the place for them to trade crypto and also to resolve all issues involving money, payment and investments.”
Despite more than 20 CVM-approved crypto funds and ETFs available today in Brazil, institutional investors and multi-market funds with R$1.6tn (US$359bn) of assets under management are largely sitting on the sidelines, highlights an InfoMoney article. Greater regulatory guidance and enabling legislation for crypto businesses could be the catalyst that opens up this segment of the market.
FTX is offering a Bolsonaro22 derivative contract token whereby traders can bet on or against the sitting president winning re-election. (InfoMoney)
More Brazilians are invested in cryptocurrencies than the stock market, asserts a new study by Anbima - a trade group representing capital markets entities.
Specifically, there are more Brazilian crypto investors (6 million) than there are CPFs registered on the B3, Brazil’s stock exchange (5 million)
The survey found that the amount of crypto held by Brazilians as of July 2022 was R$270m (US$50m), roughly 3% of Brazil’s total GDP
The 6 million crypto investors in the country is also about 3% of the total population
The average Brazilian crypto investor is 28 years old, comes from Class A or B, and has around R$45,000 invested (Exame)
Argentine startup Lemon Cash announced an integration with Pix and is looking to bring its “100% crypto lifestyle” ethos to Brazil. Founded in 2020, Lemon Cash has gained 1 million customers and a 22% market share in its native country where crypto is “already mainstream” with its debit card product that allows users to make everyday payments in crypto and earn bitcoin cashback rewards. It expects to launch a similar product in Brazil soon. Co-founder Borja Martel told CoinTelegraph Brasil:
“Lemon wants to make cryptocurrencies understood as a way of life and not just an investment. Because you can invest in crypto, but you can also live in crypto. This is the turning point that Lemon has brought to people in Argentina. And this is something that in Brazil still doesn't exist….
Brazil is the most attractive market in Latin America for both entrepreneurs and investors, but it is also a difficult and very competitive market. But we believe that our distinctive way of approaching this market makes Brazil present itself as a great opportunity."
Liqi launched a new token called “ImpactToken Outubro Rosa” in partnership with Instituto Impacto. 100% of the proceeds will go to women’s health care services in Ceará. (CoinTelegraph Brasil) (CriptoFacil)
Does it make sense to mine bitcoin in Brazil? Not yet, argues John Blount, CEO of FMI Minecraft Management in a Portal do Bitcoin op-ed
Kodo Assets, a real estate tokenization platform, is holding a public offering of tokens linked to commercial rental properties in the Faria Lima financial district of São Paulo. The total value of the offering is R$3.5m, with 25,000 tokens traded at R$140 each, with an expected yield of 6% annually from dividend payouts. The offering will be restricted to foreign investors and will be issued and traded under Bahamian law. (CoinTelegraph Brasil)
Two months after launching its own cryptocurrecy, Mercado Pago - the fintech arm of Mercado Livre - is seeing steady user growth and adoption of its crypto trading platform which it launched in December. Valor reports that 2 million users have made some type of transaction involving digital currencies directly in the app since then.
Tezos aims to be the most adopted blockchain in Latin America, according to new Tezos Brasil CEO Guilherme Baumworcel. (BeinCrypto)
Sports betting app Bolla has announced operations in Brazil and has integrated bitcoin and cryptocurrency payments into its interface. (CoinTelegraph Brasil)
Crypto exchange Ripio is working to create its own Polygon sidechain called Ripio chain. (CoinTelegraph Brasil)
ESG Tech Abundance Brasil has plans to plant and tokenize 1 billion trees by 2030. Each tree would be represented by a token with liquidity in secondary markets while promoting biodiversity and environmental restoration. (Exame)
Heloisa Passos, founder of blockchain games studio Trexx and curator of one of the largest NFT gaming communities in Latam is launching a new effort to bring the Brazilian and European blockchain ecosystems closer together. (CryptoTimes)
Billionaire and noted bitcoin hater Warren Buffet now has significant exposure to crypto via Berkshire Hathaway’s US$1bn investment in Nubank. (Portal do Bitcoin)
São Paulo-based digital bank Capitual is hiring for 15 new positions. (Portal do Bitcoin)
The Banco Central issued the first units of the Digital Real in a test environment at the institution’s LIFT Lab, which is developing studies and use cases for the CBDC. (BeinCrypto)
99Pay is offering 100,000 scholarships for a financial education course, conducted via WhatsApp, that touches on bitcoin and cryptocurrency investments. (CoinTelegraph Brasil)
CoinTelegraph Brasil interviewed several local experts discussing why Brazil jumped seven slots in this year’s Chainalysis’s Geography of Cryptocurrency report.
Experts from BNDES, Federal Police, CVM and the Banco Central will speak at the Crypto House of Commons event on November 18-19, organized by NürnbergMesse Brasil. The event will cover crypto investing trends, NFTs and the metaverse.
Brazilian tokenized carbon credit startup Bluebell plans to create “environmental crops” with proceeds from its tokens. These would be used as new sources of income for rural properties that takes into valuation the soil, hydrology and biodiversity of the location. (Exame)
Fenasbac pushed back against news last week that initial Digital Real prototypes had been minted in the Banco Central’s LIFT Lab. (Exame)
🎮 NFTs, Gaming and Metaverse
Renan Bolsonaro, President Jair Bolsonaro’s youngest son, is serving as an ambassador to a questionable metaverse project called Myla. The project features an NFT game and raised at least R$266,000 in a token sale of its native MYLA token, on the BNB Chain. The game features characters such as himself and his father as the good team, with political opponents like Supreme Court minister Alexandre de Morais playing the role of villains. (Portal do Bitcoin)
Brazilian footballer Neymar launched his own NFT collection on OpenSea called JungleVibes and as well as a metaverse called Beast Mode. in collaboration with NFTStar The project was first announced in October 2021 but seemed to have stalled amid the market downturn.
Mercado Pago, the fintech arm of Mercado Livre, is entering the metaverse with the launch of an official store on Inverso, the GTA Role Play server, where users can purchase skins, graffiti stickers, game equipment and more. MLCoin, Mercado Livre’s cryptocurrency, will be accepted as a payment method. (CriptoFacil) (Portal do Bitcoin)
Cruzeiro, a Brazilian football club, is holding a digital event in the metaverse called Cruzeiro Big Blue that will feature lectures, panels, historic games and participation by fans and former players like (and current club owner) Ronaldo Fenômeno. Ronaldo said at a press conference:
“There is enormous potential for Brazilian football to grow in the online world. And Cruzeiro comes out ahead. We are going to develop a new concept of relating to the fans.” (CoinTelegraph Brasil) (Exame)
Danilo Gentili, comedian and host of “The Noite” show on SBT, announced a new metaverse world and NFT game called Brazuera. (Portal do Bitcoin)
50% of Brazilians would use the metaverse to make purchases like digital apparel, games and event tickets, according to a survey by payments tech company FIS. Anderson Lucas, vice president of business at FIS commented:
“This scenario indicates that companies that are migrating to this universe can take information to the consumer about the features of this environment, because this is a new format of interaction between different audiences that can be widely explored by companies from different segments in line with the multiple profiles and needs of society.” (Exame)
Brazilian comedian and TV personality Marco Luque launched a collection of 2000 NFTs in September called Esquentaverso. Despite having 8.9 million followers on Twitter and 4.6 million on Instagram, he has managed to sell just 17 of the collectibles. (Portal do Bitcoin)
Adriane Galisteu, a Brazilian television personality and model, is creating a metaverse avatar via a partnership with Mercado Bitcoin. (Portal do Bitcoin)
🏛 Public Policy, Regulation and Enforcement
“Bitcoin Sheik”" Francisley Valdevino da Silva suffered a defeat in court when a Curitiba judge granted a petition in a lawsuit filed by a Rental Coins investor and declared the company’s bankruptcy.
In the decision, the judge ordered the company to produce a list of all victims within five days and opined that the Sheik has a “a reckless life, living in the midst of luxury arising, probably, from his irregular activities”.
Rental Coins, an alleged billion dollar Ponzi scheme, is one of at least 100 companies owned by the Sheik
The judge also appointed an administrator who will be responsible for identifying the company’s assets and selling them off to compensate injured creditors.
Lawyers for other creditors argue, however, that the bankruptcy filing actually harms their clients because it serves as a distraction. A preventative detention order, for instance, would have been preferable to a bankruptcy. One attorney told Portal do Bitcoin:
“Bankruptcy was requested by a creditor in order to ensure the payment of its claims. But in cases of this nature, of allegedly fraudulent companies, bankruptcy ends up being a gift, contributing to their illicit practices, as it distracts the authorities and investors about the destination of the capital raised. We will demonstrate to the authorities that bankruptcy will bring losses to the investors harmed by the coup leader.” (CoinTelegraph Brasil) (InfoMoney)
Is blockchain technology a solution to the censorship questions plaguing Brazil’s political scene? It’s probably too early to tell, but this CoinTimes piece raises the question.
The Partido dos Trabalhadores is uploading the governing plans of its candidates to the Decred blockchain in order to preserve their authenticity and fight against fake news. (Portal do Bitcoin)
A court ordered Binance to reimburse a customer who had his Trust Wallet hacked and drained of R$30,000 worth of crypto. (Portal do Bitcoin)
Maike Rodrigues and Marina Giehl Reis, the founders of a bitcoin pyramid scheme called Totalx, were sentenced to nine and six years imprisonment, respectively, and ordered to pay a R$6.5m fine as retribution. Totalx promised investors a 4 percent daily return through the use of trading bots, but the Rodrigues and Reis used the funds to instead pay personal expenses. The operation received R$6.5m in deposits between January 2019 and August 2021. (Portal do Bitcoin)
ex-footballer Ronaldinho Gaucho has been promoting Olymp Trade - a cryptocurrency platform prohibited by the CVM from operating in Brazil, Portal do Bitcoin reports. The former superstar has a track record of promoting questionable projects and pyramids, though he is far from the only celebrity to be engaging in this type of activity.
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