🇧🇷BCR #90: Revolut launches in Brazil with splash announcement at Web Summit Rio
Plus: the mysterious fate of the Brazilian national football club's fan token
Olá pessoal!
Welcome to 🇧🇷Brazil Crypto Report for the week of May 1-5, 2023.
I wasn’t able to catch much of Web Summit Rio as I had some personal stuff to attend to this week in the US, but it looked like a really incredible event that elevated Brazil’s tech scene to the global stage. I look forward to hearing more about this from readers who were in attendance. It sounds like there will be many more editions of this to come, so I’m quite excited to see how this grows in the years to come.
Have a great week everyone, and let’s dive in!
-AWS
Revolut goes live in Brazil
One of the world’s top digital banks, or “challenger banks”, launched in Brazil last week with a splash announcement at Web Summit Rio.
Per CoinDesk, CEO Nik Stronsky said in a statement:
"Our mission is to unlock a borderless economy with financial products that are accessible and easy to use and that allow our customers to use their money efficiently. We will start with the global account and crypto investments, but this is just the beginning."
The bank has 29 million customers worldwide across Europe, Australia, Singapore, Japan and soon the US. Given the size of Brazil, the market could easily become one of Revolut’s largest.
The firm hired BTG Pactual’s Glauber Mota roughly a year ago to guide its Brazil launch and now has a team of 50 people inside the country. Its initial product rollout includes a multicurrency account and crypto investing platform, as well as educational courses that reward users in the form of the Polkadot token.
Mota told Valor:
“Brazilians are still relatively underserved in cross-border transactions and we want to make this faster, easier and cheaper.”
How will Revolut fit into Brazil’s crowded digital banking scene? Mota argued that the combination of Revolut’s mature product offering and the Brazilian population’s growing digital savviness creates a unique entrance opportunity:
“If we had gotten here three, five years ago, there would have been a lot of entry barriers. Technology has advanced a lot and we have an indisputably superior product.”
The multicurrency account will offer immediate transfers to other Revolut customers in 150 countries, conversions into 27 fiat currencies 24 hours per day, and 90 cryptocurrencies. Crypto withdrawals will not be initially available to Brazilian customers, nor will stablecoins, staking services and Revolut products like credit cards.
The crypto portion of the app offers automatic purchase orders, stop-loss functionality, recurring contributions and educational content. Mora explained:
“Brazil has more than 10 million CPFs that invest in crypto and financial education is very important, we want to expand this process”.
Revolut’s Brazil user acquisition strategy will revolve around member referrals and social media ads, as opposed to large mass media buys.
The fintech has also applied for a direct credit society (SCD) license from the Central Bank that will enable it to offer credit products and more payment and transfer options. It has not ruled out applying for a DTVM license.
While it waits for its license application, Revolut is working through alliances and partners. It is using Bexs’ banking as a service infrastructure and offering its prepaid cards through Visa, though an agreement with Mastercard is also in the works
Users will be able to make purchases through their debit card, Google Pay, Apple Pay and Pix. Mota told Brazilian Report in an interview:
“These functionalities are particularly interesting for people that travel a lot, work abroad, and receive payments in other currencies or even want to save money and have a small part of it in stronger currencies.”
Buying dollars through the Revolut app will be 3-10 percent cheaper for Brazilians than by using an international debit or credit card because Revolut can offer a lower spread and use the commercial - rather than tourism - dollar to real conversion rate
Web Summit Rio Roundup
Transfero announced a new partnership to bring a Pix on and off-ramp service to Wirex’s crypto platform. Wirex also plans to bring a crypto-enabled debit card in Brazil later this year. Wirex CEO and co-founder Pavel Matveev said in a statement:
“As demand for seamless access to crypto grows, we’ve been rapidly expanding our products and reach to new countries. Transfero already have a impressive reputation within South America, so it’s great to collaborate with them to enable users to add funds with the ultimate convenience, flexibility and best-in-class experience utilising Wirex’s crypto platform in Brazil.”
Other representatives from the Brazil crypto industry who spoke at the conference include Mercado Bitcoin CEO Reinaldo Rabelo, Bitso CEO Daniel Vogel, Dux CEO Luiz Octavio Gonçalves Neto, CriptoFácil founder Paulo Aragâo, several of the Portal do Bitcoin journalists and more.
The strange mystery of the Seleção Brasileiro Fan Token
InfoMoney’s Lucas Gabriel Marins published a fascinating look into the bizarre fate of the Brazilian Football Confederation (CBF in Portuguese) official fan token - known as BFT - which was issued by Bitci, a largely unknown Turkish crypto exchange.
The token was launched in 2021 during the peak of the bull market - selling 30 million units within 20 minutes and raising US$90 million.
Billed as the largest ever token sale by a national football club at launch, the token price has since collapsed, the CBF’s contract with Bitci was terminated and fascinating questions abound as to what actually happened to the money raised during the sale.
The price plummeted from a high of US$1.53 during World Cup season to just $0.06 currently. Meanwhile, the CBF has said nothing publicly about the publicity stunt since the token sale.
But the mystery expands further. Unlike other fan tokens which at least try to offer some type of utility to holders via exclusive experiences or voting rights on trivial things like uniform colors, BFT didn’t offer any such thing.
There is also a realistic possibility that the token is not even owned by any Brazilians. The coin is also not traded on any foreign or national exchange operating in Brazil, and Bitci does not appear to have any integrations with local financial institutions to enable purchases via Pix or bank transfers.
It’s a wild chronicle that’s definitely worth a read. It’s also quite interesting that this story, given its significance and ties to the Brazilian national football confederation is one that has generated fairly minimal news coverage and reporting up until this point. I did cover it briefly in this newsletter back in November when the CBF terminated its relationship with Bitci.
Valor also ran a long yet less spicy exposé exploring the rise of the fan token market in Brazil. The trend kicked into high gear in 2021 with numerous clubs launching these tokens as a way of creating heightened engagement between fans and clubs, but the lack of financial value and lackluster non-financial benefits offered to holders has led many to question the value proposition of these tokens.
CoinTelegraph Brasil also published a piece assessing the question of whether fan tokens could be deemed securities by the CVM. The TLDR is that the short answer is probably not unless there are specific financial returns promised by the issuing clubs to token holders.
🎙Recent 🇧🇷BCR Podcast episodes
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!
1️⃣ Bruno Ramos de Sousa, Hashdex’s head of US and Europe, joined to discuss the history of crypto ETFs and the road ahead for one of the Brazil crypto market’s crown jewels. (Spotify, Apple Podcasts)
2️⃣ Cláudio Rabin, editor-in-chief at Portal do Bitcoin, joined to help us better understand what’s happening with the ongoing probes into Binance’s derivatives offerings. Apologies the audio isn’t great on this (Spotify, Apple Podcasts)
3️⃣ Jorge Borges, head of Latam sales at Fireblocks, joined to talk about the unicorn crypto infrastructure provider’s expansion efforts in the region. (Spotify, Apple Podcasts)
🗞Brazil Crypto News Rundown
📈 Markets
Crypto infrastructure provider Paxos is looking to expand its “crypto-as-a-service” offerings in Brazil and Latin America via a partnership with Mastercard. The “Crypto Source” platform seeks to bring crypto trading to any bank and eventually build out tokenization products. Mercado Pago, PicPay and Nubank are currently using the product. Arnoldo Reyes, Paxos’s head of Latam, told Valor:
“Brazil will be one of the countries where we are going to take some products and services under development first.”
Mastercard introduced its Mastercard Crypto Credential, which is a common set of standards and infrastructure for verifying transactions between and consumers and businesses using blockchain networks. Crypto exchanges Mercado Bitcoin and Bit2Me, among others, are among the first to join the coalition in hopes of enabling transfers between the US and the Latam region. Walter Pimenta, EVP of Products and Engineering at Mastercard for Latin America and the Caribbean, said in a statement:
“The Latin America and Caribbean region is among the top regions for digital asset adoption and remittances that leverage digital assets as a means of exchanging value. Mastercard Crypto Credential can help address key challenges that have traditionally impeded mainstream use of this type of use case, driving more industry players to join this space in a meaningful way.” (Mastercard) (The Block)
Mercado Bitcoin became the first Brazilian exchange to list the Sui token, the native coin of the Sui Layer 1 blockchain which was developed by former Meta/Facebook engineers. MB also listed EUROC - the Euro-pegged stablecoin issued by Circle. (Portal do Bitcoin)
Hashdex’s João Marco Braga da Cunha wrote an op-ed in CoinTelegraph highlighting his models around crypto asset allocation in a traditional investment portfolio.
1.6 million unique CPFs (unique individuals) reported crypto trades in March, according to data from the Receita Federal
Declared trading volume for the first quarter of 2023 was R$47 billion (US$9.5 billion) - up 21 percent year-over-year
The number of CNPJs (unique business IDs) that reported crypto trades during the month was 61,257 - the second highest figure on record and a 26 percent growth over January of this year.
Brazilian traders have already moved more than R$4 billion (US$810 million) worth of bitcoin and R$36 billion (US$7.3 billion) in USDT so far this year. (CoinTelegraph Brasil)
Itaú Unibanco plans to offer custody services for crypto funds starting in 2024 through its Itaú Digital Assets division. The bank sees this area as a strong opportunity due to a recent rule change out by the CVM that allows crypto funds to custody their assets wtih Brazilian (instead of foreign) institutions. Eric Altafim, director of products and desks at the bank, told Broadcast/Estadão:
“When we started to study blockchain, it was very clear that at some point the technology will be used as a market infrastructure.” (InfoMoney)
A new Brazilian asset manager called Metrix has developed an actively managed crypto fund driven by 100 million data points. The Metrix Liquid Token fund first launched offshore late last year with a “long-biased” directional strategy and will be available to Brazilian professional and accredited investors at the end of May. Founder Bernardo Bonjean told Valor:
“We organize our intellectual capital in the form of metered data so that our managers can perform real-time analysis with high depth to deliver differentiated returns”
Digitra.com has announced the listing of PEPE, the latest trending memecoin, providing Brazilian investors the opportunity to purchase it with Brazilian reais without paying fees. (Livecoins)
Plamev Pet, a company focused on health insurance for dogs and cats, is going public through tokenization on BEE4, the first regulated market for tokenized stocks by the CVM.
The initial public offering (IPO) began on the Beegin platform, where investors can make minimum investments of R$2,055.
The Plamev Pet IPO aims to raise R$6.4 million, with nearly half of the amount already raised in just one day. BEE4 is a platform that offers tokenized stocks and operates as an organized blockchain-based market.
The listing of Plamev Pet marks the third tokenized stock listing on BEE4, which aims to attract high-growth companies in attractive sectors (InfoMoney) (BlockNews)
Cassio Krupinsk wrote a column for Money Times highlighting the CVM’s shifting views toward fixed-income tokens - namely the move to categorize them as securities and require registration by issuers - and arguing that companies and individuals should be prepared for the eventual flexibility of the CVM and greater adoption of these products.
📱Adoption
The Brazilian Central Bank formally released its directives for the Digital Real pilot project and opened the application window for interested participants. The also opened applications for its LIFT Lab 2023, in partnership with Fenasbac - incoming proposals will be analyzed May 31-June 29th. (CoinTelegraph Brasil)
Gustavo Cunha discussed the Digital Real’s “trilemma” of decentralization, privacy and composability, and the difficulty of solving for each of these, in a column for InfoMoney. The piece draws from a recent interview he did with Fábio Araújo, who is leading the Digital Real project for the Central Bank (highly recommend watching if you understand Portuguese)
Bitso has become the first cryptocurrency company in Brazil authorized to offer credit. Its Direct Credit Society (SCD) license was granted by the Central Bank and published in the Official Gazette on Wednesday May 3. (BlockNews)
Marcel Van Oost published a nice piece on the success of Brazil’s Pix instant payments system in his excellent Latam fintech newsletter
Brian Brooks, a partner at Valor Capital and former head of the US Office of the Comptroller of the Currency, argued on a panel at Milken Institute that crypto still has some hope outstanding:
“Ninety percent of crypto products are, at best, outright scams. But 10% of them are not.” (InfoMoney)
The Brazilian Association of Banks (ABBC) will form a consortium to enable participating financial institutions to participate in Digital Real testing projects. (BlockNews)
Brazilian banks expect to invest R$45.1 billion (US$9.1 billion) in technology this year, with a primary focus on digitization, according to a survey by Febraban and Deloitte. (Exame)
Rio de Janeiro has already done its part to enable the use of cryptocurrencies for paying taxes - now the initiative is “in the hands of the private sector”, Rio’s Secretary of Economic Development Chico Bulhões told Portal do Bitcoin.
“The IPTU issue we have already resolved because the City Hall already makes it possible for companies to offer this service to their customers. There is a decree and it is already valid. Now we are encouraging companies, such as cryptocurrency brokers, to adhere to this decree and put it into practice.”
The Advocacy General of the Union (AGU) included cryptocurrencies and blockchain as topics that job candidates for 100 new openings should have knowledge of. (Portal do Bitcoin)
A pair of Brazilians are launching the DeSci Journal this month to give greater visibility to research and help generate revenue for authors. (BlockNews)
Mercado Bitcoin has partnered with SoulPrime to launch the first decentralized social media platform based on Web3 technology in Brazil. The collaboration aims to reward users with MBRL, Mercado Bitcoin's real-pegged stablecoin. (Portal do Bitcoin) (CoinTelegraph Brasil)
VC firm Viden Ventures is releasing a book called “The First Dive into the World of Web3: How Cryptocurrencies, the Metaverse, and NFTs Will Change Our Lives” as a collection of 5,000 NFTs - with 50% of the proceeds going toward the Educar+ NGO, which is focused on bringing Web3 education initiatives to the Complexo do Chapadão in Rio de Janeiro. (BlockNews)
🎮 NFTs, Gaming and Metaverse
A new initiative aimed at growing interest in chess across Brazil will award to NFTs to regional winners and participants. Students aged 6 to 21 who are enrolled in the education system are eligible to participate in the Inkluziva School Chess Tournament. (Livecoins) (CoinTelegraph Brasil)
🏛 Public Policy, Regulation and Enforcement
The CVM released a new version of Resolution CVM 175 to provide further clarification on investments in crypto assets for fund administrators and managers.
The updated document, originally released last December, addresses the operation and disclosure of information for investment funds, specifically noting that investment funds could allocate up to 10 percent of their funds to crypto.
Specific to crypto, the document clarifies that funds can invest in crypto assets up to certain limits based on the type of investor. The resolution also addresses the issue of investing in offshore funds that allocate their resources in crypto assets and crypto ETFs. (Portal do Bitcoin) (Livecoins)
GAS Consultoria, the crypto pyramid scheme operated by “Pharaoh of Bitcoins” Glaidson Acacio dos Santos, is supposedly still operating in Portugal through a company called Kastelokódigo Unipessoal Ltda. Attorney and alleged GAS victim Jeferson Brandão will travel to Portugal in July to report to local authorities why he believes Portuguese citizens are falling for the scheme operated by Glaidson and his wife Mirelis Zerpa. (Portal do Bitcoin) (CriptoFacil)
The Chamber of Deputies appears likely to create a Parliamentary Commission of Inquiry examining the rise of cryptocurrency pyramid schemes. Such a commission has been requested by Aureo Ribeiro and has received the support of Chamber Speaker Arthur Lira. The expected date for the commission’s creation is May 16. If brought to life, the body is expected to investigate Atlas Quantum and GAS Consultoria, among others. (Valor Investe) (Livecoins) (CriptoFacil)
Federal Police seized luxury cars and motorcycles valued at R$3 million in “Operation McQueen”, the latest phase of Operation Kryptos which brought down GAS Consultoria founder Glaidson Acacio dos Santos in 2021. (Portal do Bitcoin) (Livecoins) (InfoMoney)
A suspected entrepreneur involved in sextortion crimes has been arrested in Paraná, Brazil, after extorting victims for at least R$1 million in bitcoin. The police, with support from the Ministry of Justice and Public Security, conducted a successful operation, leading to the suspect's apprehension, seizure of electronic devices, and freezing of bank accounts and bitcoin wallets. (Livecoins)
A Brazilian federal court has denied a habeas corpus request from a lawyer in Maranhão who is suspected by the FBI of being involved in an online gang that orchestrated a theft from a major US crypto exchange. (Livecoins)