Cryptocurrencies in Brazil: The 2023 Overview

The world went through hard times in 2022. The Ukrainian War and US inflation were just a few of the challenges faced in the global macroeconomics sphere, Latin America included. The so-called Crypto Winter set in, with the collapse of Earth Luna Stablecoin and the FTX centralized exchange shaping what looks like a prolonged bear market.

Despite slow adoption in Latin America, cryptocurrencies have advanced and evolved in Brazil both culturally and legally, as shown by Sherlock Communications’s 2023 blockchain report. 

But what does the overview of the largest Latin American country look like in 2023? Keep scrolling down to learn more about this year’s crypto perspectives. 

Cryptocurrencies in Brazil

Brazil fully embraced cryptocurrencies last November when its Chamber of Deputies legalized crypto as a means of payment. Brazil’s Crypto Law makes the country the biggest Latin American market, a leader in regional adoption, and the continent’s most stable regulatory framework: Brazil has the most cryptocurrency ETFs in Latin America.

Not all cryptocurrencies in Brazil are legal. The bill covers digital currencies and air miles programs.

It is important to note that the Central Bank will supervise all payments made using these currencies.

The new bill was a boost to the country’s crypto ecosystem, which is set to expand more and more. 

Governments and institutions are indisputably catching up with technology and regulations. Brazil is ranked 7th in Chainalysis’ 2022 Global Crypto Adoption Index, alongside Argentina, Colombia, Ecuador and Mexico. 

Notably, cryptocurrency holders in Brazil are required to declare any holdings exceeding 5,000 BRL on their income tax applications. Failure to do so could result in legal repercussions. 

This regulation aims to promote transparency and accountability in the cryptocurrency industry, ensuring that individuals and organizations pay their fair share of taxes and abide by applicable laws. 

By upholding these standards, Brazil is taking a proactive approach to regulating the use of cryptocurrency, while also fostering a culture of responsibility and compliance within the industry.

Brazil’s Crypto Ecosystem

Bitcoin and Ethereum entered the country in 2021 – the ground zero for cryptocurrencies in Brazil – and since then investors have entered the crypto market in a simple, regulated and secure way. 

Even in the midst of last year’s Crypto Winter, crypto adoption in Brazil grew from 2 million users to around 16 million in just twelve months. Major global exchanges like Binance, Coinbase and Crypto.com place Brazil at the epicenter of Latin America’s crypto ecosystem, with 7.8% of Brazilians owning cryptocurrencies. 

How did this happen? Adoption was mostly driven by inflation and the depreciation of the real. NFTs also won Brazilians over, and the country now ranks second in the world for NFT adoption, behind Thailand in first place.

Other ETFs listed on the Brazilian Stock Exchange include:

• HASH 11
• Carbon neutral bitcoin
• Defi
• Metaverse
• and Web3

Private banks launched their ETFs, from Itau Asset Management (Latin America’s largest private asset manager, with approximately $165 billion in AUM) to Galaxy Digital forces crypto, called IT Now Bloomberg Galaxy Bitcoin ETF. 

Mercado Livre , one of Brazil’s largest e-commerce marketplaces, invested in Mercado Bitcoin, enabling Brazilian residents to buy, sell and hold cryptocurrencies such as BTC and ETH. The transaction is secured by the safety subsidiary of MercadoPago – the largest payments firm of its kind in Brazil, with 1 million crypto customers.

Another huge private bank offering Bitcoin and Ethereum to its customers is Nubank, the largest digital bank in the country. Nubank is  also creating its own crypto asset, a loyalty rewards program, in partnership with Polygon. 

Picpay, XP Investimentos, and Santander have also got into ETFs and the metaverse, using crypto in their bases. 

What about Developing Projects?

Cryptum is offering a Blockchain-as-a-Service solution that allows web2 businesses to seamlessly transition to web3, making the process more accessible in the short term. This enables brands to take advantage of the benefits of web3 technology without needing to completely overhaul their existing infrastructure.

Furthermore, Brazil’s adoption of web3 technology is creating a fertile ground for the growth of Regenerative Finance (ReFi), positioning the country as a hub for this emerging industry.

Web3 technology is increasingly being utilized by builders to create positive impacts, and many projects have gained traction in this space. Examples of such projects include:

• Cambiatus, a platform for social currencies
• Moss, a platform for carbon credits
• Ribbon DAO, which incentivizes donations
• Detrash, an app that promotes recycling
• and Play4Change, a DAO that uses web3 tools to promote education, financial inclusion, and social transformation among thousands of Brazilians.

These projects actualize web3 technology’s potential for positive social and environmental change, by leveraging the transparency, security, and decentralization provided by blockchain technology. 

Ethereum Brasil

In 2022, the launch of Ethereum Brasil marked the beginning of an exciting new era for the blockchain community in the country. The organization quickly gained momentum and hosted two major events – one in Rio and one in São Paulo. 

Looking ahead, Ethereum Brasil is gearing up to host its second Ethereum Rio Conference in March 2023, which promises to bring together some of the brightest minds in the industry for a lively discussion on the latest trends and developments in the Ethereum ecosystem. 

Cryptocurrencies in Brazil are definitely on the rise – both in terms of community and usage. According to  André Salem, Founder of Cryptum.io, less than 1% of developers in Latam are blockchain specialists. Brazil is fertile ground for blockchain growth, but healthy expansion requires easy and accessible development.