🇧🇷BCR #87: Binance inks NFT partnership with Brasileirão football tournament
Plus: Central Bank to include tokenized public debt in Digital Real pilot; another Brazilian crypto fund shutters
Welcome to 🇧🇷Brazil Crypto Report for the week of April 10-14, 2023! I paid my taxes this weekend so feeling relieved until next April 🙏
You may have seen that our sister 🌎Latam Crypto Report publication is ramping up in an effort to cover the region more broadly. It is written by my friend Kristin Majcher, who until recently was the Latin America correspondent for The Block.
Be sure to take a look at this if you’re looking to learn more about the region beyond Brazil. Feedback is always welcome on how we can make this better/more useful.
🚨Also, if anyone is planning to be at Consensus in Austin later this month I’d encourage you to stop by the Filecoin Network Base side event, which we’re hosting April 24-26 ahead of the main Consensus event which officially runs the 27-28th.
☕️ I’m also helping to spin up a Brazil/Latam Builders breakfast for one of the days with Conor from Ethereum Brasil. Details to come but please try to stop by if you’re in town!
Central Bank unveils new Digital Real pilot details
At a public workshop hosted last week in Brasilia, the bank confirmed that it will include federal government bonds in its Digital Real CBDC and tokenization system.
This means that three products in total will be tested in the pilot: the Digital Real CBDC, the tokenized real and the federal public bond.
Rogério Lucca, head of the BC’s Banking and Payment System Department, said the proposal to include government bonds in the test was reviewed and approved by the National Treasury. He stated:
“A requirement tested on the platform will be asset fragmentation, that is, [the ability to] transact up to 1 cent of a real, or one hundredth of a federal government bond,
The tokenized bonds will be issued inside of Treasury Digital Wallet housed on a private DLT. Marcus Sucupira, Deputy Chief Department of Open Market Operations, said during the workshop:
“We will limit, at first, to the currency, without expanding the BC electronic liabilities, we will allow bank deposits to incorporate the retail transaction capacity of end customers and, in order to ensure and test DVP transactions [ Delivery versus payment], we proposed that the asset to be traded is the federal public title, something with what the Treasury agreed.” (Valor Investe) (BeinCrypto) (InfoMoney)
One of the primary motivations driving the Digital Real is the tokenization of the Brazilian economy and financial system. Of concern to the Central Bank is the organic growth of the tokenization market in the country, particularly that these assets continue to be settled using private digital currencies outside of the government’s purview. Lucca stated:
“For distributed technology and tokenized assets, we don't have an infrastructure. What happens is that, often, when you have the development of tokenized assets, these transactions end up having to be settled through private stablecoins, bringing uncertainty to the national financial system.”
Binance inks partnership with Brazilian Football Confederation (CBF)
The exchange will launch the first NFT in the history of the Brasileirão. The NFT Season Pass will provide fans with access to exclusive benefits and experiences, such as access to a new gaming platform called Fanverso, lower trading fees on Binance and discounts on CBF Academy School of Business and Management courses.
The NFTs will be available to Binance users at no cost upon passing KYC verification.
CBF president Ednaldo Rodrigues said in a statement:
"During my management at the head of the CBF, we sought to connect with all forms of interaction with the fan. And it would not be different in this partnership with Binance. Bringing technology, combined with the emotion of football, will give us even more options for approaching and engagement with new audiences and different fan profiles."
Guilherme Nazar, Binance’s managing director for Brazil, commented:
“We are honored to partner with the CBF and we are sure that this historic launch will allow more Brazilians to feel closer to their clubs and learn about cryptocurrencies, so that they can take advantage of what this technology has to offer.”
KPTL shutters its crypto funds
Brazilian asset manager KPTL is closing its crypto funds due to operating difficulties in light of the collapse of Signature and Silvergate banks and returning funds to shareholders.
The Bohr Arbitrage Crypto Fund was an arbitration vehicle - first launched in 2020 - that used algorithms dedicated to operating crypto derivatives through an offshore structure. KPTL also shuttered Long/Short Fund LP, similar to Bohr, and Lupa Web3 Fund LP - which invested in NFTs, decentralized finance, games and metaverse.
In total, the three funds had US$10 million in assets but as much as US$55 million during the height of the bull market in 2021. While run by Brazilians, the funds were headquartered in the Cayman Islands.
Brazilian crypto fund manager Giant Steps also wound down its funds earlier this year, citing the FTX collapse.
Renato Ramalho, KPTL CEO, commented:
“The priority was to protect the investment and liquidity of investors. Despite everything, we had excellent results in this vertical, but the operation could become more risky. That's why we took the proactive decision to close the funds and it wasn't easy, not least because this month Bohr would deliver 4% profitability”
“It has nothing to do with performance, mathematical modeling, demand, it was not our team's problem either. We are without financial infrastructure to serve our audience. We depended on banks to move our audience's accounts.”
CVM says Binance may have committed “crimes of public criminal action”
In a lawsuit filed against the exchange, the agency said that regarding Binance, it found “the existence of evidence of the crimes of public criminal action”. The original report was sent in December of last year to Attorney General’s office in the State of Såo Paulo.
When contacted by InfoMoney, the Attorney General’s office could not provide any further information.
🎙Recent 🇧🇷Brazil Crypto Report podcast episodes
You’ve probably noticed that I’ve been ramping up podcast content lately. If you have particular requests about topics or guests you’d like to see on the show please let me know. Also please give me a subscribe/follow on your favorite podcast platform - it helps greatly!
Also, if you are a service provider/operator/investor looking to enter Brazil, a Brazilian company looking to expand your presence internationally, or an exchange operating in the Brazil market - I want to interview you!
2️⃣ Bitso’s Daniel Vogel and Thales Freitas joined to talk about the exchange’s first two years of operation in Brazil, culminating last month in a payments institution license being granted by the Brazilian Central Bank. (Spotify, Apple Podcasts, YouTube)
🗞Brazil Crypto News Rundown
Brazilian crypto investors declared R$15 billion (US$3 billion) in cryptocurrency trades for the month of February, per the Receita Federal- the country’s tax authority.
The figure is down slightly from R$16.1 billion reported in January, but up from R$12.8 billion declared in February 2022
However, February was a record month for most unique CNPJs (business IDs) reporting crypto operations - 49,994
R$12.98 billion of the total was brokered on domestic exchanges and R$680 million on overseas exchanges
Bitcoin and ether were the two largest cryptos traded by volume, moving R$1 billion and R$228 million respectively. USDT recorded R$12 billion in volume.
Brazilians moved R$165 million (US$33.6 million) in crypto assets without the use of exchanges or brokers in February - 4x the total moved in January, according to data from the Receita Federal. The data appear to indicate a movement toward self-custody and away from keeping coins on exchanges.
However, popular crypto accountant Ana Paula Rabella says that it is not yet possible to to discern the extent of this migration over the first two months of the year.
Luisa Pires, head of cryptoassets at Levante, told InfoMoney:
“With the recent bank run, the crash of the FTX exchange and the market 'FUDs' (which means fear, uncertainty and doubt) that we are seeing in relation to the solvency of some companies, this faster movement is natural (for wallets). These events served as catalysts.”
QinV expects to launch quantitative crypto investment options for individuals in the second half of 2023. (Valor)
The five most profitable ETFs in Brazil so far this year are bitcoin or cryptocurrency products, according to data from ETFs Brasil. (CoinTelegraph Brasil)
Tony Volpon, a former director at the Brazilian Central Bank, tweeted an Ethereum price chart with the phrase “don’t be on the wrong side of history”. He had previously voiced skepticisms of bitcoin and cryptocurrencies.
Valor talked to Ripio’s Henrique Teixeira about the exchange’s new Ripio Portal Web3 wallet
“Gen Z”, or people aged 16-25, represent 46% of Brazilians who invest in cryptocurrencies, according to data from Anbima’s “Raio-X do Investidor” report.
Coinbase will have a program in Brazil to form a community of local developers to build on its new Base blockchain. Dan Kim, the exchange’s VP of Business Development, with developers at the Google for Startups campus in São Paulo last month. In an interview, he told BlockNews:
“We already have a team of engineers and I'm hiring more people. That's how we started to form communities. When the company here is a certain size, we can have meetups and education seminars to help with project development.”
Gino Matos of CoinTelegraph Brasil profiled five Web3 communities in Brazil that provide quality education to those looking to learn more about crypto.
21 percent of Brazilians do not have access to financial services, according to a survey by Serasa Experian. (CriptoFacil)
Febraban, a trade group representing large banks in Brazil, will host its Febraban Tech 2023 conference in São Paulo June 27-29. On the agenda will be topics such as metaverse, Web3, tokenization and digital society
KriptoBR, which sells crypto wallets in Brazil, announced that it has resumed shipping physical wallets to customers directly from Brazil after shipping material from the US for the last three years. The change came in response to new tax burdens imposed by the Receita Federal - an increase of up to 250 percent. (Portal do Bitcoin)
Forbes chronicled the story of the Jericoacoara Praia Bitcoin experiment, featuring interviews with project creator Fernando Motolese, Foxbit’s Ricardo Dantes and Mercado Bitcoin’s Fabrício Tota.
Foxbit announced the launch of a mobile application for its Foxbit Pay product. (CoinTelegraph Brasil)
The city of São Thomé das Letras is joining the Montanha Bitcoin movement and has set up full bitcoin and Lightning nodes. Led by Lucas Leiva, the project has hopes of replicating Jericoacoara’s Praia Bitcoin experience in creating a bitcoin circular economy. (CoinTelegraph Brasil) (Livecoins)
The Fund for the Technological Development of Communications (Funttel) the authorized the transfer of R$1.15 billion (US$234 million) for investments in technology, including blockchain. (Livecoins)
Blockchain Academy, the educational platform owned by 2TM, launched a suite of new features and tools for its B2B and B2C customers. (Portal do Bitcoin)
Fireblocks announced the hiring of attorney Nicole Dyskant as an advisor for the Latin America region. (Portal do Bitcoin)
Santos FC fan token holders will have more utility, including a Web3 game experience, through a partnership with TOPGOAL. (Livecoins)
🎮 NFTs, Gaming and Metaverse
Brazilian skateboarding champion Bob Burnquist is launching an NFT collection in partnership with retail brand Reserva in June at the NFT Brasil event in São Paulo. The launch will follow the “phygital” concept of fusing personalized items and their digital versions. (Livecoins) (Exame) (CoinTelegraph Brasil)
An NFT version of an image captured by Brazilian photographer Juliana Barros was on display at NFT.NYC in New York. (CoinTelegraph Brasil)
A collection of 200 physical items linked to Pelé, Neymar and other footballers will be sold together linked to NFTs to certify authenticity. The collection is being launched by eNor Global. (Exame)
CoinTelegraph Brasil profiled Refugia, a project founded by 18 year-old Thalles Lima from Rio that uses NFTs to help distribute artwork created by refugees.
🏛 Public Policy, Regulation and Enforcement
A judge ordered the blocking of R$7.8 million (US$1.5m) in assets belonging to Willian Bigode, the former Palmeiras player alleged to be a partner in a cryptocurrency pyramid scheme called Xland Investment. (InfoMoney) (Portal do Bitcoin)
The CVM, Brazil’s securities regulator, has begun meeting with asset tokenizers in response to a letter published earlier this month deeming most digital fixed income assets to be securities. ABCripto, a trade group representing the industry, argues that the interpretation would make the emerging sector unfeasible. ABCripto CEO Bernardo Srur said the expectation is that the situation will improve “in a matter of days, not months”. Fabricio Tota, Mercado Bitcoin’s head of new business, told Valor:
“It's a CVM orientation for the market as a whole. Obviously, the subject is complex because we are redoing [in tokenization] what the financial and capital market has been doing a hundred years ago. Going up the level of this conversation and making adjustments will be necessary. It's good because it plays more light for the industry. ” (Valor Investe) (InfoMoney) (Portal do Bitcoin) (CoinTelegraph Brasil)
The CVM’s interpretive letter on fixed income tokens opens the door to potentially labeling ETH a security, Isac Costa - partner at Walde Advogados, professor at Ibmec and former CVM staffer - told Exame:
"Ultimately, the economic essence of the operation is the offer of a remuneration that will result from an activity that will be carried out by third parties, the investor is passive".
The CVM fined Trader Group and its main partner Wesley Binz Oliveira R$14 million (US$2.85 million) for an irregular securities issuance that used a token. The Espirito Santo-based company is alleged to be a pyramid scheme and was the target of a Federal Police operation in 2019, which resulted in the closing of the business. (Valor Investe) (InfoMoney) (Portal do Bitcoin)
The Federal Government ignored the Federal Police and did not invite the institution to participate in debates around defining the legal framework for Brazil’s new crypto law, CoinTelegraph Brasil reports. The source said:
"So far, the proposed decree has not been sent to the Federal Police for suggestions.”
“From 2020 to 2022 there was a 700% increase in Federal Police operations in the area of financial crimes involving crypto assets.”
A 33 year-old man in Mato Grosso confessed to being responsible for a bomb attack with the objective of extorting a supermarket chain for R$300,000 (US$61,000) to be paid in bitcoin. (Portal do Bitcoin)
A cryptocurrency miner in Bahia sued Coelba, the state’s electric utility, after a power outage at his residence caused damage to his mining equipment. (Livecoins)
Federal Deputy Aureo Ribeiro is advancing a new proposal in the Chamber of Deputies to investigate pyramid schemes and other crimes in the cryptocurrency market. (Livecoins)
The MP-Procon of Paraíba said that it has received more than 3,300 complaints from former Braiscompany investors. (Livecoins)
A veterinarian from Brazil’s Federal District has accused an ex-partner of stealing R$500,000 to purchase land and start a bitcoin mining company. (Livecoins)
A Brazilian cryptocurrency influencer had $$820,000 in funds blocked by Crypto.com, allegedly without reason.
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