🇧🇷BCR #98: Crypto takes over Febraban Tech
Plus: Congressional crypto probe unveils witness list; another Brazilian bank launches crypto brokerage
Olá pessoal!
Welcome to 🇧🇷Brazil Crypto Report for the week of June 26-30, 2023. Sneak preview of this edition:
yet another Brazilian TradFi bank enables crypto trading for customers (this time in conjunction with the B3 stock exchange
a congressional committee probing cryptocurrency scams and pyramids is taking the “kitchen sink approach”
Febraban Tech, one of the country’s premier TradFi meets technology events, was taken over by crypto and digital asset companies
Let’s kick this thing off
-AWS
Banco Inter launches crypto platform in partnership with B3 Digitas
Banco Inter became the latest Brazilian bank to enable crypto trading services for customers.
Inter Invest, its investment platform which has a reported user base of 26 million customers, will offer trading in bitcoin, ethereum, litecoin, USDT and XRP to a select customer base. The minimum investment will be R$1.00. The digital bank previously offered exposure to crypto only through investment funds offered by Hashdex and Vitreo.
The solution comes in partnership with B3 Digitas, which is a branch of Brazil’s B3 stock exchange that offers digital asset infrastructure. Trading is available in the Inter application for use by retail and companies alike with a minimum trade of R$1.
Felipe Bottino, director of Inter Invest, said in a statement:
“The Brazilian investment industry is increasingly mature, and the topic of cryptocurrencies has gained considerable space in this market. B3 Digitas comes with the legacy of strength and credibility of the Brazilian stock exchange and will support us in delivering a service with a high level of efficiency and protection for our customers, which we consider to be a priority value.”
B3 Digitas CEO Jochen Mielke de Lima added:
“B3 Digitas offers a transparent and secure platform, contributing to the construction of an increasingly robust and reliable cryptocurrency market. With our service, we work for institutions to enable their investors to increasingly diversify their portfolios and explore new markets in constant transformation.”
From the B3 side, the partnership is yet another front in the exchange’s embrace of the digital asset industry (more on this later).
(Valor) (Portal do Bitcoin) (CoinTelegraph Brasil)
Nearly 40 witnesses to testify in congressional crypto probe
The Parliamentary Commission of Inquiry (CPI) approved invitations and summons for 38 witnesses to provide testimony as it investigates cryptocurrency pyramids and related activities that have harmed Brazilian consumers. You can find the full list here
Notable names on the invited witness list include Central Bank president Roberto Campos Neto, CVM president João Pedro Nascimento, financial influencer Thiago Nigro (aka Primo Rico) and “Pharaoh of Bitcoins” Glaidson Acacio dos Santos. Representatives from big tech companies, like Meta and Google, and broadcasters SBT and Globo are also on the list.
Executives of numerous crypto exchanges operating in Brazil have also been invited. These include Mercado Bitcoin’s Reinaldo Rabelo, João Canhada of Foxbit, Thales Freitas and Daniel Vogel of Bitso, and Binance managing director Guilherme Nazar.
Importantly, Binance’s Nazar was summoned, as opposed to just being invited. He will be asked about the exchange’s relationship with its local operator B Fintech and other partnerships it has with other entities in the country.
Binance released a statement highlighting its willingness to contribute to the committee’s work:
“Considering that scammers operate on several exchanges simultaneously, Binance is the exchange that has most helped authorities in investigations and victims to recover their money, offering constant and immediate support to law enforcement agencies and authorities.”
“We expect all invited exchanges and financial institutions to contribute to the CPI and that the commission is an opportunity to disseminate Binance best practices to other players in the industry, especially smaller exchanges, preferred targets of fraud and scams, so that together we can build a secure crypto ecosystem that protects users in Brazil.”
Witness testimonies could begin as early as Tuesday, July 4.
Other notable names on the witness list include Atlas Quantum founder Rodrigo Marques, ABCripto’s Bernardo Srur, Binance’s Daniel Mangabeira and Thiago de Carvalho, blockchain personality Courtnay Guimarães, BTG Pactual’s Andre Portilho, Fabio Tonetto Plein of Coinbase and Portal do Bitcoin editor-in-chief Claudio Goldberg Rabin.
Several Brazilian football clubs including Flamengo, Santos, Palmeiras and Corinthians have also received official letters from the CPI asking for more information about their involvement with cryptocurrencies.
Notably left off the initial witness list were former Brazilian football star Ronaldinho Gaucho, Binance’s Changpeng Zhao, Brazilian Football Confederation president Ednaldo Rodrigues.
(Portal do Bitcoin) (Livecoins) (CoinTelegraph Brasil) (InfoMoney)
🤝TradFi and digital assets converge at Febraban Tech
Latin America's premier finance and technology event was marked by the presence of cryptocurrency and blockchain companies, symbolizing the broader convergence of TradFi, fintech and digital assets that we are witnessing in the Brazil market currently.
Companies like Fireblocks, Parfin, Mercado Bitcoin and a myriad of others joined in the sponsorship ranks, and the three stages were chock full of content exploring topics like tokenization, Digital Real and custody.
Meanwhile, executives from Bradesco, Itaú and Santander Brasil discussed the path forward for asset tokenization to take hold in the Brazilian financial system. Ivo Mósca, deputy director of Febraban’s CBDC working group, argued in an interview with Exame that the Digital Real system is akin to “replacing the engine of the national financial system” and that it will “bring solutions to potential problems that have not yet been fully mapped.”
Portal do Bitcoin put it this way: “Bottom line: the traditional financial market and institutional players finally seem to be on an equal footing with cryptocurrencies.”
However, Febraban president Isaac Sidney emphasized in his speech that Brazil’s banking industry has no plans of capitulating to newer, flashier competitors of any sort:
“Digital players that came out of nowhere calling themselves modern, cheaper and innovative, refer to us in a demeaning and not infrequently accusatory tone. But, we banks were not born now and we do not work with marketing and advertising. We are very proud of being what we have always been, traditionally innovative”.
🎙New 🇧🇷BCR Podcast Episodes
Catch this episode I recorded at Consensus 2023 with Rodrix Digital. Rodrix is one of Brazil’s original crypto influencers and content creators, having first started his YouTube brand back in 2017. You can listen on Spotify, Apple or Google Podcasts.
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🗞Brazil Crypto News Rundown
📈 Markets
CoinTelegraph Brasil reports that B3 will launch its bitcoin futures product in September and integrate new cryptocurrencies into its offering. B3 Digitas CEO Jochen Mielke de Lima said that the exchange will focus these products on the SaaS market and institutions seeking exposure to the digital asset market, adding:
"The focus is to build infrastructure and institutional solutions for the tokenized economy…The intention is not to open a cryptocurrency exchange to compete for retail investors"
Brazilians carry out 50-60 percent of cryptocurrency transactions on platforms that are not based in Brazil, the Central Bank estimates. The figure is based on cross-referencing government and business databases, and is actually lower than estimates for other countries - which run as high as 70-75 percent. (BlockNews)
N4 has developed a working capital product for small and medium-sized entities that uses the Kona DeFi platform. Kona is a tool, developed by Fuse Capital and Transfero, that connects investors with short-term borrowers and facilitates the advance of funds using the BRZ stablecoin. (Valor)
Parfin introduced a new business unit devoted to tokenizing any existing financial asset within the Digital Real environment. CEO Marcos Viriato told Valor:
"The objective is for companies in the financial market to be able to accelerate the adoption of digital assets. We managed to shape the platform according to the business needs of each company.”
The B3 exchange is testing a new environment for issuing, registering and trading tokenized debentures in a partnership QR Capital using the Hathor blockchain. The test assets were tokenized and then transferred to digital portfolios of other financial institutions. The exchange said that similar projects are in the works and will be available to customers soon. Humberto Costa, superintendent for new business at B3, stated:
“B3 offers a complete platform, with state-of-the-art technology and security, to facilitate the trading of tokenized assets in an agile and transparent way, allowing all types of investors to expand the possibilities of diversifying their portfolios.” (Valor) (Portal do Bitcoin)
Binance has prohibited Brazilian peer-to-peer traders from trading with fiat currencies other than BRL, Portal do Bitcoin reports. Previously, traders were able to trade using dollars, euros and Argentine pesos, among other currencies. Binance commented saying it periodically “reviews its processes and tools”. One P2P trader interviewed by Portal explained:
“Three days ago, overnight, everyone [from outside Brazil] was banned from trading with Brazilians on the P2P platform. Now, only Brazilians can negotiate with Brazilians. This is a problem because there were many Argentines who negotiated with us.”
Mercado Bitcoin listed the Ribus token, which is the first utility token aimed at the real estate sector in Brazil. (Portal do Bitcoin)
Xtage, the crypto platform operated by XP, said it will remove three cryptocurrencies that the US SEC has deemed to be securities. XP said in a statement:
“Due to recent manifestations by the Securities and Exchange Commission (SEC), regarding certain crypto-assets traded on American exchanges, we inform you that we have decided to suspend, as of 06/28/2023 and for an indefinite period, purchases of Polygon (MATIC) crypto-assets , Solana (SOL), and Cardano (ADA).” (CriptoFacil) (Portal do Bitcoin)
Mercado Bitcoin launched a new business unit called MBStartups devoted to connecting startups with accelerators, investors and other resources. (Portal do Bitcoin)
📱Adoption + Digital Real
Digital Real coordinator Fabio Araújo said that the Central Bank will begin testing the CBDC project with the general population by the end of 2024. In the meantime, he said the next steps will be to begin executing transactions in August with participating companies as validator nodes, as well as continuing the search for adequate privacy solutions. The comments came at the first Digital Real public forum held June 26. (CoinTelegraph Brasil)
Itaú is prioritizing developing the Digital Real pilot project before it launches its institutional crypto asset custody product and other asset tokenization services. Guto Antunes, head of Itaú Digital Assets, told Valor that the bank is already conducting privacy and scalability tests on Hyperledger Besu
“We see this new digital real infrastructure as the DvP [delivery versus payment] instrument of the entire new tokenized economy. The digital real pilot needs to leave so we can have the kitchen in order, because he is the one who will guarantee interoperability for the network.”
Blockchain infrastructure provider BBChain has rolled out a new private sandbox for companies interested in testing out tokenization use cases in Brazil. The platform, called BlockchainLab Sandbox RD, is targeted at companies that were not among the consortia selected by the Central Bank to participate in the Digital Real pilot and allows for simulation delivery-versus-payment smart contracts on Hyperledger Besu. (Valor)
A study by consultancy Oliver Wyman found eight Digital Real use cases with high applicability in Brazil, including ownership rights of non-financial assets (such as a car registration), micropayments, managing multiple counterparties in a wholesale context, trading of low liquidity assets and fraud reduction. (Valor)
Banco BV head of innovation Jimmy Lui discussed how the bank is approaching Digital Real use cases in an interview with Exame. He views the Digital Real as a base layer upon which a multiplicity of customer-driven use cases and applications will be built:
"Money will become software, and when money becomes real software, it can integrate with other software, such as proprietary software, and manage to do smarter things , which are not possible today".
Meanwhile, labor relations between Central Bank employees and the federal government are taking a turn for the worse. Employee strikes are now jeopardizing the advancement of critical initiatives like updates to Pix, Digital Real and crypto regulation. (InfoMoney)
Honey Island Capital partner Gean Chu had a really good Twitter thread on Digital Real implications. Definitely worth a read and re-tweet
Liqi’s Daniel Coquieri had a nice op-ed in CoinTelegraph Brasil discussing the advantages of using an EVM-compatible and open-source platform like Hyperledger Besu for the Digital Real.
A new Web3 global perception survey by Consensys finds that 1 in 5 Brazilians hold cryptocurrencies currently and nearly half intend to invest in the next 12 months should a regulatory framework be implemented in the country. Further, many Brazilians associate cryptocurrencies with positive narratives such as “future of money” (21% of respondents) and “digital ownership” (15%). 1,005 Brazilians were surveyed for the report.
Another survey, this one conducted by Bitso in partnership with Cantarino Brasileiro and BlockNews, found that female investors in Brazil have a higher risk appetite than men with higher portfolio concentrations in cryptocurrencies. (Estadão)
Brazilian “no-code” Web3 startup Sonica launched a new platform for DeFi and CRM services at Collision, a tech conference in Toronto organized by Web Summit. Sonica CEO Alexandre Adolgio explained:
“Sonica helps to democratize access to Web3, as you don't need to know programming to launch your token or develop your collection of NFTs. Being the first Web3 company to launch the platform abroad helps to pave the way for other Brazilian companies in the segment.” (CoinTelegraph Brasil)
WEB3DEV is expanding its partnership with Solana to encourage developers to build their own virtual stores on the SolanaPay network. (Portal do Bitcoin)
Minas Gerais real estate firm Construtora Sudoeste launched a new tokenized property development called Aldea Vale do Sereno. (CoinTelegraph Brasil)
Brazilian fintech Monnos has launched its Monnos Pay which enables cryptocurrency payments in a B2B setting. (Inovativos)
NFTs, Metaverse and Games
Upland has expanded its virtual São Paulo and is now offering 32,000 plots of land across seven neighborhoods. (CoinTelegraph Brasil)
🏛 Policy, Regulation and Enforcement
Chiliz and Socios.com joined ABCripto, bringing the trade group to 28 total members. The two related entities have issued fan tokens for more than 160 sports teams worldwide, including several Brazilian football clubs. (Portal do Bitcoin) (CoinTelegraph Brasil)
“Sheik of Bitcoins” Francisley Valdevino da Silva will be released from prison after being granted conditional release by a Curitiba judge on June 29. The Rental Coins operator has been held under preventative detention since being arrested in November 2022. (Portal do Bitcoin)
The manager of the bankrupt GAS Consultoria pyramid is seeking a remedy that would allow the personal assets of employees to be used to pay creditors. (Globo)
GAS Consultoria founder Glaidson Acacio dos Santos (aka “Pharaoh of Bitcoins) is reportedly refusing to turn over the password to a wallet with Dash tokens worth R$400 million. “It’s my retirement", he reportedly gave as his justification. (Portal do Bitcoin) (Livecoins)
The auction of R$1.4 million worth of goods seized from Antonio Neto Ais and Fabricia Campos by Federal Police earlier this year failed to attract any buyers. (Portal do Bitcoin)
Portal do Bitcoin reports that the list of GAS Consultoria creditors exceeds 89,400 names.
Federal Deputy Caio Vianna is seeking to hold a public hearing on blockchain as a tool for modernizing public administration. (Livecoins)
Alleged cryptocurrency pyramid Unick Forex announced its return in the form of a new entity called White Club. The entity continued to operate in Brazil in 2019 after even after the CVM had levied several fines and prohibitions against it. (CoinTelegraph Brasil)
Brazil’s Federal Public Ministry held a workshop on cryptocurrency regulation in conjunction with the Chamber of Economic and Consumer Order. (Portal do Bitcoin)