Brazil is currently one of the top five countries with the largest number of crypto investors; it has over 10 million users, approximately 5% of the population, behind only India, the US, Russia, and Nigeria.
Despite big losses across the world, investments or payments using cryptocurrencies continue to dominate the media as many people still have questions about crypto’s risks and advantages. Security is always at the forefront of every discussion. Many experts are worried about the risks crypto payments pose and their rising use in fraud schemes and other crimes.
Crypto regulation and partnerships with Open Finance, Pix, and CBDC
Crypto assets are not yet regulated in Brazil, but soon will be. The proposed bill, currently being discussed by the House of Commons, will create a set of rules to provide additional security for investors and improve the increasing oversight of crypto-related companies. Most exchanges reacted positively to the news from the Brazilian Securities and Exchange Commission (CVM), which said the guidelines are not intended to interfere in the industry – especially to avoid affecting innovation processes. The exchanges have noted the market will benefit from greater security and reliability. Many international companies are waiting for the regulations to be released, studying alternatives, and preparing the user experience to enter the Brazilian market, as they expect to see significant demand once the regulations are in place. Among other measures, the proposed bill states both domestic and international companies are required to obtain licences from the regulator.
The Central Bank of Brazil (BCB) is optimistic about the country’s crypto regulation and has proposed interconnection with a CBDC (Digital Real), Pix, and Open Finance, as well as potential opportunities to transform the financial services market and connect to the metaverse. Roberto Campos Neto, President of the BCB, claims digital assets will lead to a future ‘tokenized’ economy.
Partnerships and engagement between regulators and companies
The market is currently operating in a zone with many unanswered questions, but experts have noted regulators, innovators, and private market players need to cooperate with one another to build a safe and secure crypto environment.
The giant cryptocurrency exchange Binance is actively studying Brazil to better understand the local market and improve its approach to preventing, investigating, and combating financial crimes. Additionally, Binance is holding several thematic workshops with a range of government agencies to address the concepts underpinning blockchain and crypto assets, as well as other issues. The goal is to also increase awareness about Binance’s anti-money laundering (AML) policies. Participants will learn more about the tools and processes offered by the company to help authorities fight cyber and financial crimes that involve digital assets. The media recently reported Binance had terminated its partnership with Brazilian payment provider Capitual, and litigation is currently underway to resolve the case. This situation reflects the complexity of the current regulatory framework and the vulnerability of some of the industry’s models and flows.
Digital giants enter the market
A new Brazilian player recently entered the market and has had a significant impact. Only three weeks after creating Nu Cripto, Nubank announced one million individual customers had used the bank’s app to purchase cryptocurrencies. With over 50 million users in Brazil, the company aims to democratise crypto and offer its customers new financial opportunities. The Brazilian unicorn is also leveraging trust in its brand and its modern user experience to streamline access while increasing security for people investing in crypto, which has attracted global attention. Bexs is also part of the Nu Cripto solution offering an FX-as-a-Service platform integrated with Nubank’s app, enabling Brazilian investors to access crypto portfolios.
Other major players are setting their sights on the Brazilian market and not just for investments, but for payments as well. Argentina’s Mercado Libre, one of Latin America’s biggest ecommerce companies, launched its own cryptocurrency, called Mercado Coin, on its platform. Mercado Coin is used to shop on Mercado Libre and receive rewards (cashback). The company believes blockchain technology has significant potential to provide safer transactions. The new crypto option is being offered to its 80 million Brazilian users, and the company has plans to start using Mercado Coin in other Latin American markets as well.
The future of crypto in Brazil
The future will depend on how regulations are framed here and in other countries – and how much crypto prices can recover. Nevertheless, it looks like there is no going back now. Traditional banks are following this market closely and giving special attention to Gen Z consumers, who are most likely to be attracted to crypto. Furthermore, an increasing number of stores are accepting cryptocurrency payments. According to CoinMap, over 900 Brazilian businesses currently accept crypto payments. They were disruptive and their future has been somewhat uncertain over the past decade, but interest from companies and governments leads us to believe crypto adoption is on track to make cryptocurrencies an efficient and robust investment and payment option in Brazil and around the world.
About Vinícius Vieira
With over 10 years of experience with Global Payment Processing, Vinícius’ fields of expertise include innovation in digital payments and fintech, global acquiring, multi-currency payment processing, cross-border payments in Brazil and Latin America, product and business development. At Bexs Pay, his main challenge is to lead commercial growth while bringing innovation and technology – which, through payment transactions, facilitate access to global goods and services for Brazilians and the best of Brazilian goods and services for the world.
Bexs connects Brazil to the world with the best team and innovative FX and payment technologies to bridge the gap between companies and customers on every continent. The group unifies the solutions developed by Bexs Bank, which has been providing tailored transactions and API capabilities to the forex market for over 30 years, and Bexs Pay, a pioneering digital payment provider for cross-border markets. This ensures Brazilian customers have access to the best the world has to offer and gives Brazilian products and services cross-border reach. Bexs has already handled millions of payments and FX transactions for global companies including TikTok, Worldline, Kwai, Thunes, Nubank, among others.