Latin America

Who is Javier Milei, Argentina’s market-friendly president?

Javier Milei, also known as “El Loco,” has proposed dissolving Argentina’s central bank and envisions a society in which contracts will replace governments.

Argentina welcomed a new president on Dec. 10, pledging profound economic reforms in the country, including the dissolution of the central bank along with a number of other measures aimed at reducing government size and spending.

President Javier Gerardo Milei is also known as “El Loco” (the crazy one), a nickname he earned at school due to his explosive personality. During his campaign, Milei pushed his “crazy” persona onto the stage, proposing disruptive measures to a population heavily burdened with a 161% annual inflation rate as of November.

His economic proposals are based on his decades of experience as an economist, ranging from advising politicians to working on private pension funds and banks, and as a professor of macroeconomics and microeconomics, having published several papers about economic growth.

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Argentina securities regulator approves Bitcoin futures index

The regulated Bitcoin futures index is reportedly a first in Latin America and is set to debut in May.

The securities regulator of Argentina has approved a Bitcoin-based futures index set to debut on the Matba Rofex exchange. The Bitcoin (BTC) futures contract will start trading in May, with the exchange claiming it would be the first regulated Bitcoin futures index in Latin America.

The National Commission of Value (CNV), the country’s securities regulator, approved the Bitcoin futures index as part of a strategic innovation agenda. The innovation agenda, which launched in the first quarter of 2022, is focused on creating a space for public-private collaboration to develop new and creative products in the capital market.

The Bitcoin futures contract will be based on the price of BTC provided by various entities in the nation offering BTC/ARS trading pairs. All trades will be settled in the national fiat currency, with traders required to deposit Argentine pesos through bank transfer.

For the provision and use of payment services in the nation, an exchange providing these contracts must ensure it has a valid contract with a payment services provider registered with the Central Bank of the Argentine Republic.

The regulated Bitcoin futures index would offer qualified investors a safe way to gain BTC exposure in a transparent and regulated environment. At the same time, the CNV has also asked the Matba Rofex exchange to incorporate alerts that warn investors of the risks associated with such financial instruments.

Related: Coinbase CEO urges Bitcoin legal tender for Brazil, Argentina — Reaction

Argentina is struggling with high inflation, and many citizens have turned to Bitcoin to mitigate the effects. The country’s peer-to-peer Bitcoin trading volume has also hit new highs amid soaring inflation.

P2P Bitcoin trading volume. Source: CoinDance

A recent bill proposed by the Ministry of Economy encouraged citizens to declare their crypto holdings and incentivized them with tax benefits. Over the years, the South American nation has taken a pro-crypto stance, with crypto adoption nearly double its neighboring countries.

Crypto penetration in Argentina. Source: Canva

The launch of the Bitcoin futures contract also comes just a week after Binance announced its expansion to Argentina. Binance CEO Changpeng Zhao shared the news of the latest approval.

Peru considering CBDC to improve payment system: Former IMF adviser

The Central Reserve Bank of Peru has released a report on the development of a central bank digital currency and promises more reports as its research continues.

The Central Reserve Bank of Peru (CRBP) has published a paper that it said will be the first in a series to examine the need, design and timing of a Peruvian central bank digital currency, reported John Kiff, research director at the Sovereign Official Digital Association (SODA). His report concentrates on issues relating to a retail CBDC.

The status quo of competing payments systems in Peru is untenable, the CBRP wrote, but the introduction of a CBDC, combined with new policies to improve the access and interoperability of existing systems, would help the central bank overcome barriers to financial inclusion and lower costs for transactions. According to the report:

“The objective of a CBDC within the framework of the payment system in Peru is to give the unbanked population access to digital payments, so it is important to know their characteristics to prepare an implementation strategy.”

Peru has serious obstacles to overcome. About half the country’s population is unbanked. Three-quarters of the unbanked live in “non-poor” households, but almost 79% of them have no savings. They live mainly in urban areas and almost all of them work informally. Almost all the unbanked have mobile phones.

Related: Developing countries love the Metaverse, rich nations not keen: WEF survey

Nonetheless, the use of digital payments in Peru has increased fivefold since 2015, the report said.

The current report marked the end of the first step out of five steps in the potential production of a CBDC, the report said. No timeline for CBDC development was mentioned. The CBRP also released a 25-question survey of potential users, due April 30.

Peru received technical assistance in the creation of the report from the International Monetary Fund under an agreement reached in May 2021. CBRP President Julio Velarde announced in November 2021 that the country would cooperate with India, Singapore and Hong Kong to develop a CBDC.

SODA is a technology-agnostic firm that provides advisory services on central banking, digital finance and the Web3 industry. Kiff is a former IMF section expert.

Magazine: Are CBDCs kryptonite for crypto?

El Salvador removes all taxes related to tech innovation for economic growth

Technology innovations such as software programming, coding, apps and AI development, and computing and communications hardware manufacturing will be exempted from taxes in El Salvador.

El Salvador, the first country to establish Bitcoin (BTC) as a legal tender, has decided to eliminate all taxes on technology innovations. The move runs parallel to establishing the National Bitcoin Office (ONBTC) of El Salvador, also known as “the Bitcoin office.“

When legalizing Bitcoin on Sept. 7, 2021, Salvadoran President Nayib Bukele saw the technology as a means to counter hyperinflation and dependence on the U.S. dollar. Over the past 18 months, El Salvador restrategized Bitcoin investments and utilized capital gains in numerous instances to rebuild the nation.

Moving ahead with the strategy, Bukele believed in winding down tax requirements to expedite technological development. As promised, on April 1, Bukele officially sent a bill to Congress — effectively eliminating all income, property, and capital gains taxes on technology innovations “such as software programming, coding, apps and AI development, as well as computing and communications hardware manufacturing.”

Supporting this initiative is the establishment of the Bitcoin office, a regulatory body for conducting joint initiatives with Bitcoin entrepreneurs and companies. According to Asociación Bitcoin de El Salvador (Bitcoin Association of El Salvador), ONBTC aims to “position the country in the world as a technological and economic power.”

In addition to attempting a financial comeback, Bukele’s ongoing efforts to reinvent El Salvador include promoting tourism, countering terrorism and building regional business hubs.

Related: El Salvador’s Bitcoin strategy evolved with the bear market in 2022

At the start of 2023, El Salvador passed legislation providing the legal framework for Bitcoin-backed bonds — Volcano Bonds.

The terminology of the Volcano Bonds is derived from Bitcoin City’s location, which is set to become a renewable crypto-mining hub powered by hydrothermal energy from the nearby Conchagua volcano.

Magazine: What it’s actually like to use Bitcoin in El Salvador

Venezuela shuts down crypto mining facilities, exchanges amid corruption probe

According to Venezuela’s attorney general office, government officials were running parallel oil operations with the assistance of the national crypto department.

Venezuela’s energy supplier has shut down crypto mining facilities throughout the country as part of a reorganization of the national crypto department and ongoing corruption investigations involving the country’s oil company.

According to local media reports, crypto mining companies, and tweets from Venezuela’s National Association of Cryptocurrencies, mining facilities were shut down in the past days in the states of Lara, Carabobo and Bolívar. It is unclear how many crypto firms were affected. Some crypto exchanges were also ordered to cease operations.

The closure of crypto mining facilities is believed to be part of an ongoing investigation of corruption involving Venezuela’s oil company PDVSA and the country’s crypto department. 

Venezuela’s attorney general, Tarek William Saab, disclosed on March 25 that government officials were allegedly running parallel oil operations with the assistance of the national crypto department. Saab commented on Twitter:

“This network used a conglomerate of commercial companies to legitimize the capital obtained from sales through the acquisition of crypto-assets, personal and real estate.“

According to Saab, at least 10 people have been arrested in connection with the investigations, including Joselit Ramirez Camacho, who led the crypto department since its inception in 2018, overseeing crypto tax rules and the country’s cryptocurrency PetroDollar (XPD). According to earlier reports, Camacho was arrested on March 17 as part of the investigation.

Since June 2020, Camacho has been listed in the United States Most Wanted List. At the time, Department of Homeland Security Investigators issued a bounty of up to $5 million for any information that would lead to the capture of the Petro’s supervisor. Authorities alleged that Camacho had “deep political, social and economic ties” to suspected narcotic kingpins, including Tareck El Aissami, the former vice president of Venezuela.

Venezuela’s president Nicolás Maduro announced the reorganization of the National Superintendency of Crypto Assets in a decree issued on March 17. Maduro’s administration claimed the decision was intended to protect the country’s citizens from the negative effects of economic sanctions, among other reasons.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

Mastercard, Binance to launch their second prepaid crypto card in Latin America

The Binance Card will let Brazilians make purchases in crypto, with real-time conversion from 14 crypto assets to fiat at the point of sale

Credit card giant Mastercard has teamed up with the world’s largest crypto exchange to launch another prepaid crypto card in Latin America.

On Jan. 30, Binance announced the launch of the Binance Card in Brazil. The new card is issued by Dock, a payment institution regulated by Banco Central do Brasil, Brazil’s central bank.

The new card will allow new and existing Binance users in the country with valid national IDs to make purchases and pay bills with crypto assets. The card is in a beta testing phase and will be “widely available in the coming weeks,” according to Binance.

Brazil is the second country where Binance has launched the product, following Argentina in August. According to the announcement, Brazil is among the top 10 markets for Binance globally.

In a press release shared with Cointelegraph, Guilherme Nazar, Binance Brazil’s general manager, said that the card is a “significant step in encouraging wider crypto use and global adoption,” adding:

“Payments is one of the first and most obvious use cases for crypto, yet adoption has a lot of room to grow.”

The card will allow real-time conversion from 14 crypto assets to fiat at the point of sale. Perks include up to 8% cash back in crypto on eligible purchases and zero fees on some ATM withdrawals.

According to Mastercard’s 2022 New Payments Index, Brazil leads the global average for crypto usage and adoption. In the global survey of more than 35,000 respondents, it found that 49% of Brazilians have made at least one crypto-related transaction in the past year, compared to the global average of 41%.

Related: Coinbase CEO urges Bitcoin legal tender for Brazil, Argentina — Reaction

In December, outgoing President Jair Bolsonaro signed a bill to legalize the use of cryptocurrency as a payment method within the country.

The new legislation has not made Bitcoin legal tender, as in El Salvador, but it includes many digital assets under the definition of legal payment methods. A licensing regime for virtual asset service providers was also established.

Bitcoin adoption of Guatemalan merchants grows one BTC tattoo at a time

The Central American country of Guatemala is getting inked on the path to greater Bitcoin merchant adoption.

Bitcoin (BTC) use in Guatemala is on the up. The Latin American country bordering El Salvador boasts Guatemalan-grown Bitcoin companies such as Ibex and Osmo, several Bitcoin Beach-inspired projects including Bitcoin Lake and now, free BTC tattoos.

A 2022 Bitcoin merchant adoption competition hosted by Osmo Wallet — a Guatemala-based Bitcoin company — led to the free ink promotion. Cointelegraph spoke to Piero Coen, the co-founder of Osmo Wallet and Steven Marroquin, the owner of Soul’s Anchor, a tattoo parlor in Guatemala City.

Free tattoo ideas from Soul’s Anchor. Source: Piero Coen 

Coen explained how the mission is to get more people to use Bitcoin:

“So we ran a competition among merchants to see who would process the most volume in Bitcoin sales in 2022. Turns out Soul’s Anchor Tattoo Shop in Guatemala City, who started accepting Bitcoin payments using Osmobusiness back in October, won the competition.”

Merchant adoption is nothing new in Guatemala. So they thought about how to make things more exciting. They decided that offering free Bitcoin tattoos to customers might be a Bitcoin-friendly marketing tactic. Coen explained, “It was a huge hit. All the slots filled up in hours!”

The free Bitcoin tattoos get the thumbs up from Cointelegraph’s Bman. Source: Coen

Guatemalan Bitcoin believers and Bitcoin tourists streamed into the store to ink their favorite Bitcoin meme, quote or art onto their skin. Marroquin, the owner of Souls Anchor, explained, “It’s been around seven months since we officially accepted Bitcoin and have two to three customers per month.” It’s a small amount, but payments are on the rise, he reports:

“The first months we had only one customer, and even though it’s still a few percentages of our income, probably 1%, we are happy to have started accepting it.”

Coen explains that “it’s still super early” for Bitcoin adoption in Guatemala and that “most business owners are still unsure about accepting and holding onto Bitcoin because of the volatility.”

By allowing instant Bitcoin to fiat currency conversion at the payment merchant terminal, merchants can sidestep the volatility. Instant BTC to fiat conversion is a growing trend in the Bitcoin payments space, as companies such as Strike — headed up by Jack Mallers — and CoinCorner offer similar solutions. Bitcoin as a means of exchange is burgeoning and Coen is optimistic about its future:

“Bitcoin adoption in Guatemala City is on the rise, every day we see more and more people getting into it, learning about it and stacking up on Sats.”

Rikki, one-half of the Bitcoin Explorers couple who spent 45 days living off Bitcoin only in El Salvador, recently traveled around Guatemala, paying his way in Bitcoin. Rikki told Cointelegraph the level of “adoption of Bitcoin in Guatemala has really surprised us,” referring to himself and his partner Laura.

“Locals are curious, they want to learn about Bitcoin and see it as an important alternative to credit cards whose fees are very high in the country.”

Indeed, by accepting Bitcoin, businesses can save over 50% on transaction costs when compared with credit card payments, “So the incentives are there,” Coen explained.

Related: As Bitcoin debuts in El Salvador, Honduras and Guatemala study CBDCs

Rikki added that “orange-pilling” efforts by Guatemalan-based companies, such as Ibex and Osmo, “are pushing to raise awareness of the technology.” The couple also visited the Bitcoin Lake, a Bitcoin-beach-style community project, where a Guatemalan mayor is mining Bitcoin in his office, before getting inked themselves as part of the promotion.

“We found the tattoo idea very cute. It is a company that wants to reward its shopkeeper who has received the most Bitcoin transactions by promoting its business.”

Bitcoin and crypto tattoos are increasingly common as crypto advocates brand themselves with their choice of coin. However, crypto tattoos can sometimes go very, very wrong.

Bitcoin tattoos belonging to Rikki (top) and Laura (bottom). Source: Rikki 

Take Mike Novogratz, the Galaxy Digital founder, as an example. His Terra (LUNA) tattoo is a constant reminder that investing requires humility. The LUNA token crashed by over 99% in 2021. Fortunately, the Bitcoin tattoos are safe for now, thanks to a January price pump. 

The driving forces behind crypto adoption in Latin America in 2022

Inflation has fueled crypto growth in the region, stimulating asset tokenization and remittance infrastructure development.

Inflation, cross-border payments, assets tokenization and nonfungible tokens (NFTs) were among the major drivers for crypto adoption across Latin America in 2022, sources in the region told Cointelegraph, with exciting examples of progress across many countries. 

Latin America made up 9.1% of the global crypto value received in 2022, reaching $562 billion between July 2021 and June 2022 — representing a growth of 40% in the period. Four Latin American countries ranked among the top crypto adopters in the latest Chainalysis Global Adoption Index.

Major developments have contributed to these results over the past 12 months. Authorities have been working on central bank digital currencies (CBDCs), implementing standards for business operations and clarifying regulations. Meanwhile, many companies in Latin America have been exploring ways to utilize blockchain technology and digital assets to solve the various challenges that countries in the region face.

“The region is ripe with opportunities for cryptocurrency adoption,” noted a spokesperson for cryptocurrency exchange Bitso, which operates in Brazil and Argentina, among other countries in Central America, adding that:

“For both Argentina and Colombia, the impacts of inflation have driven many to use cryptocurrency. […] For Colombia, remittances are another significant driver of adoption, even surpassing coal as a driver of dollar revenue in 2022 according to a Banco de Bogotá report.”

Crypto Latam

Institutional adoption and regulatory developments have paved the way for Mercado Bitcoin to issue Brazil’s first stablecoin, the MBRL, which is backed one-to-one by the Brazilian fiat currency through a partnership with Stellar. The country’s central bank is scheduling for 2023 the test of its digital currency, and for 2024, its full release to over 200 million people. Also, a recently approved bill will regulate virtual assets providers after years of discussions in Congress.

“Brazil has been a major player in the crypto economy story in Latin America for several reasons: institutional adoption, regulatory advances, and general public buy-in. In that sense, public sector involvement is inevitable — this represents an extremely positive move, which enhances the crypto-active industry while providing greater security for investors,” noted Fabrício Tota, director at Mercado Bitcoin.

Colombia also plans to introduce its digital currency, aiming to increase transparency and prevent tax evasion, which is estimated to account for nearly 8% of the country’s gross domestic product. In Chile, the central bank has delayed plans for the issuance of the digital Chilean peso for a deeper analysis of benefits and risks.

To fight inflation in Argentina, cities such as Buenos Aires and Mendoza started accepting cryptocurrencies for tax payments. At the same time, Santa Fe Province plans to implement crypto-mining activities to raise funds for rail infrastructure upgrades. These may be timely initiatives given that Argentina’s inflation rate is forecast to be 73.5% at the end of 2022, according to FocusEconomics panelists. 

“Argentina is becoming a hub for bringing tech development and resources to Latin America from the rest of the world,” said Ryan Dennis, senior manager at Stellar Development Foundation. “This naturally flows into blockchain development with a large number of startups in the country and thus a growing number of developers and founders working together in blockchain and crypto.”

Tokenization

Latam’s crypto space has also benefited from the tokenization of investment products, allowing many to access products that were previously only available to large investors. “Tokenization of digital assets has been growing over the past years,” including assets such as corporate bonds and real estate debts, noted Dennis. 

Another reason contributing to the rise of tokenization of financial assets is the high-interest rates in the region. Most Latin American countries have double-digit interest rates, which prompts investors to seek assets with predictable returns and less volatility. This is an ideal scenario for financial companies working on tokenization and decentralized finance (DeFi) solutions.

Music and art tokenization are also trending in Latin America. “One revolution that has happened in LatAm is giving artists a window into the world of Web3,” Dennis explained. “There are a lot of artists that have been able to get out of their local communities and country to become internationally renowned. That’s huge.”

Crypto industry challenges in the region are similar to those seen worldwide: A lack of education about blockchain technology, insufficient regulation, and a deficit of trust. “The firms and projects that will lead the crypto in Latin America next year will be the companies thoughtfully addressing the need for increased transparency and trust,” noted Bitso’s spokesperson.

Argentina’s province to issue US dollar-pegged stablecoin

The bill also authorizes local artists to issue nonfungible tokens (NFT) to promote financial and cultural inclusion.

The province of San Luis in Argentina approved legislation allowing the issuance of its own stablecoin pegged to the United States dollar. The token, dubbed the “Activo Digital San Luis de Ahorro,” will be available to all citizens of the province over the age of 18 and 100% collateralized in liquid financial assets of the province. 

The bill authorizes the province to issue the stablecoin up to 2% of its annual budget. It also stipulates that assets can be transferred between parties, but it does not specify which chain will be used for the transactions. The province of San Luis is home to over 430,000 people.

The stablecoin issuance is only one of the initiatives described in the bill called “Financial Innovation for Investment and Social Economic Development,” which aims to promote development in several sectors in the province through blockchain technology, including generating value and improving auditing procedures.

Related: Argentina’s fan token sinks 31% after World Cup loss against Saudi Arabia

Alongside the stablecoin, the bill allows local artists to issue nonfungible tokens (NFTs) with the goal of promoting financial and cultural inclusion. The bill stated:

“The ‘SAN LUIS ART DIGITAL ASSETS’ will be art collections from the Province, giving local artists the opportunity to digitize their work and have it launched on the digital market through an internal web platform for purchase and sale. For the creation of these collections, NFT (Non Fungible Token – Token No Fungible) technology will be used, making this work of digital art unique, granting ownership and authenticity to the artist or holder of the digital asset.”

A complex economic scenario is driving crypto adoption in Argentina, where two-digit inflation has sparked company and government initiatives into cryptocurrencies and blockchain technology. As of year-end, FocusEconomics panelists expect inflation to be at 73.5% in Argentina.

A Chainalysis report revealed that over 30% of consumers in Argentina already use stablecoins to make everyday purchases, most likely for small retail transactions, under $1000. While global crypto adoption slowed because of the price downturn, emerging markets are increasingly bringing early adopters to the space, Cointelegraph reported.

Brazilian crypto industry gets regulatory clarity amid global uncertainty

The recent regulatory framework from the Brazilian Congress will benefit the country’s financial institutions and bridge local liquidity with global markets.

As the global crypto community is still licking its wounds from the FTX collapse, a liquidity crisis continues to spread around centralized exchanges and decentralized finance (DeFi) alike. 

It is soon to be decided whether the coming regulation triggered by FTX’s bankruptcy will bring a silver lining to crypto.

The Chamber of Deputies of Brazil, the lower house of the country’s federal legislative body, has passed a regulatory framework that legalizes the use of cryptocurrencies as a payment method within the country.

It is estimated that 10 million Brazilians, or about 5% of the population, trade crypto assets.

The largest centralized exchange in Brazil is a local business called Mercado Bitcoin, with roughly three million users. International players like Coinbase or Gemini do not have such a relevant presence in Brazil.

Thus, global bankruptcies like FTX’s have not affected the blockchain market in Brazil as strongly as in the United States or Europe.

Recent regulatory news from Brazil gives a ray of hope as other countries around the world are targeting the cryptocurrency industry without making any distinction between good and bad actors, especially in the U.S. and Europe.

In a blog post titled “Bitcoin’s last stand,” the European Central Bank warned banks against interacting with digital currency as it could taint their reputation, claiming BTC is hardly used for legal transactions and that the regulatory attention it is currently receiving from lawmakers around the world could be “misunderstood as approval.”

The U.S. Commodity Futures Trading Commission (CFTC) continues to aggressively police new digital commodity asset markets. According to a report from the CFTC, a total of 82 enforcement actions were filed in 2022’s fiscal year, imposing $2.5 billion in “restitution, disgorgement and civil monetary penalties either through settlement or litigation.”

Although the framework voted by the Brazilian Congress doesn’t make Bitcoin legal tender as it was achieved in El Salvador, legalizing crypto as a payment method is a positive step toward encouraging local businesses to adopt and transact using crypto.

Salvadoran President Nayib Bukele announced that the country would be implementing a Dollar-cost average trading strategy to accumulate Bitcoin. After buying a large chunk of its Bitcoin reserves at market heights, El Salvador currently finds most of its crypto investment to be underwater.

Current crypto landscape in Brazil 

Brazil has been steadily preparing for the regulation of tokenized assets and the current administration has taken a positive stance on financial innovation for the last couple of years, but no one was expecting it to be voted on so suddenly.

The Brazilian Securities and Exchange Commission is pursuing changes in the country’s legal framework concerning its regulation of cryptocurrencies. In 2021, the securities regulator approved a sandbox structure for the testing of blockchain companies and solutions.

The Central Bank of Brazil also shared its objectives to create the country’s sovereign digital currency pilot before the end of the year.

Recent: FTX collapse won’t impact everyday use of crypto in Brazil: Transfero CEO

Luis Felipe Adaime, CEO of Moss.earth — a Brazilian climate tech that develops blockchain-based solutions to help companies offset carbon — told Cointelegraph:

“The Central Bank innovated massively in 2020 with the ‘PIX,’, an electronic instant payment method that has gained wide acceptance in the country. Considering the success it’s had so far I would imagine that the next natural step would be to have the ‘PIX’ on-chain.” 

Brazil’s legal framework states that the central bank will determine the rules, and a license will be required for any firm that exchanges fiat for crypto or offers crypto custody and crypto-related products. 

“Licence requirements will limit who can participate and run these kinds of operations, the process of approval by the central bank might constrain the market.” Thiago César, the CEO of fiat on-ramp provider Transfero Group, told Cointelegraph, adding, “There is no reason why the president will not sanction this law, this is the final step and he will probably do it as there is big pressure from the central bank to accept the legal framework.”

The current president of Brazil, Jair Bolsonaro, has relied on the Ministry of Economy and the advice of technical nominees for such complex economic decisions and is likely to approve the framework before leaving office on Jan. 1, 2023.

A clear regulatory framework will bring more legal certainty for some institutional players to participate but by no means was Brazil hindered in terms of innovation within this field.

Banks and financial institutions might venture into new product offerings such as credit lending with crypto and maybe even crypto remittances with this new regulated environment in Brazil. Three major banks in Brazil were already offering crypto-related products before Brazil’s Congress passed the bill.

Who is set to benefit the most from this new regulation?

Despite GDP stagnation in the past two decades, Brazil has had a relatively benign low-inflation scenario — especially when compared to neighboring Argentina and Venezuela — and has implemented significant financial innovation in recent years.

Positive regulation might allow listed funds and publicly traded instruments to purchase their crypto locally instead of going outside of the country.

Investment funds in Brazil are only allowed to buy crypto assets on regulated exchanges. This created a scenario in the past, where a fund that wanted to allocate part of its investments in crypto had to resort to international exchanges that were regulated in a different jurisdiction.

Anything that bridges liquidity between multiple jurisdictions and Brazil is a very interesting opportunity. An international investor would face a less complicated bureaucratic process and local businesses could access more capital.

“I believe Brazilians have benefitted strongly from financial and tech innovation like the rise of fintech and the adoption of blockchain, with wider access to cheaper credit, growing investments and trading in crypto,” Adaime stated.

DeFi initiatives involving Brazilian stablecoins like the Celo Brazilian real (cREAL) and the Brazilian Digital Token (BRZ) are making foreign direct investment easier by enabling international stablecoin holders to fund local small and medium enterprises.

Related: Luiz Inácio Lula da Silva wins Brazil’s presidential race — What does this mean for crypto?

Brazil is a very financially secluded market from the rest of the world due to the restrictive nature of its local currency. “The only currency that can be used in Brazil is the Brazilian real so there are no USD purchases or foreign currency bank accounts. This makes the local currency quite strong.” Cesar added:

“Naturally, local players are expecting regulators to be tough on international players so that they have a better fighting chance.”

International exchanges in Brazil such as Binance, ByBit and Crypto.com were expanding fast and storming the market with better product offerings, more liquidity and books that are more liquid and globally integrated.

A group of local exchanges has been vocal about international exchanges operating in Brazil without any type of regulation. Those local exchanges played a big part in pushing the vote by Congress to happen as soon as possible.