Centralized exchanges and Decentralized Finance (DeFi) similar.
Whether the upcoming regulation caused by the FTX bankruptcy will bring a silver lining to the crypto will be decided soon.
The Brazilian House of Representatives, the lower house of the Brazilian Congress, has passed a regulatory framework to legalize the use of cryptocurrencies. Domestic payment method.
It is estimated that 10 million Brazilians, or about 5% of the population, trade cryptocurrencies.
Brazil’s largest centralized exchange is a local business called Mercado Bitcoin, with about 3 million users. International players like Coinbase and Gemini do not have such a presence in Brazil.
Therefore, a global bankruptcy like FTX has not impacted the Brazilian blockchain market as much as it has in the US or Europe.
Recent regulatory news from Brazil offers a ray of hope as other countries around the world, especially in the US and Europe, target the cryptocurrency industry without distinction between right and wrong.
In a blog post titled “Bitcoin’s Last Stand,” the European Central Bank warned banks not to interact with digital currencies as it could damage their reputation, BTC said. Rarely used for legal transactions It also said that the regulation, which is currently attracting the attention of lawmakers around the world, could be “misinterpreted as approval.”
The U.S. Commodity Futures Trading Commission (CFTC) continues to Aggressively crack down on new digital commodity asset marketsThe CFTC reported that a total of 82 enforcement actions were filed in fiscal 2022, resulting in “$2.5 billion in restitution, exploitation, and civil penalties through settlements or litigation.”
While the framework voted by the Brazilian Congress has not made bitcoin legal tender, as was achieved in El Salvador, legalizing crypto as a payment method would encourage local businesses to adopt and transact in crypto. It is a positive step to encourage
El Salvador’s President Naive Bukele said the country Implementing the Dollar Cost Average Trading Strategy save bitcoins. After buying most of its Bitcoin reserves at the market height, El Salvador now finds most of its cryptocurrency investments under water.
Current Crypto Outlook in Brazil
Brazil is steadily gearing up to regulate tokenized assets, and the current administration has been positive about financial innovation for the past few years, but who would expect such a sudden vote? I didn’t expect it either.
The Brazilian Securities and Exchange Commission Pursue changes to the country’s legal framework Regarding the regulation of cryptocurrencies. In 2021, securities regulators have approved a sandbox structure for testing blockchain companies and solutions.
The Central Bank of Brazil also shared the country’s objectives. Sovereign Digital Currency Pilot by the end of the year.
Moss.earth CEO Luis Felipe Adaime, a Brazilian climate tech company developing blockchain-based solutions to help businesses offset carbon dioxide, is next to Cointelegraph. said like
“In 2020, the central bank made a major innovation with its widely accepted electronic instant payment method in the country, ‘PIX’. Given the success so far, I think the natural next step would be to bring “PIX” on-chain. ”
Brazil’s legal framework states that the central bank determines the rules, requiring licenses for companies that exchange fiat currency for crypto or offer crypto custody or crypto-related products. .
“Licensing requirements limit who can participate in and carry out these types of operations, and approval processes by central banks can constrain the market,” said CEO of fiat onramp provider Transferro Group. Thiago Cesar told Cointelegraph: So that the central bank accepts the legal framework.”
Brazil’s current president, Jair Bolsonaro, relies on the advice of the Ministry of Economy and experts for such complex economic decisions, and may approve the framework before stepping down on January 1, 2023. is high.
A clear regulatory framework provides more legal certainty for some institutional investors to participate, but Brazil is by no means deterred in terms of innovation in this area.
Banks and financial institutions may start offering new products such as cryptocurrency credit and cryptocurrency remittances in this new regulatory environment in Brazil. Before the Brazilian parliament passed the bill, her three major banks in Brazil were already offering crypto-related products.
Who will benefit most from this new regulation?
Despite stagnant GDP over the past two decades, Brazil has shown a relatively benign low-inflation scenario, especially compared to its neighbors Argentina and Venezuela, and has implemented significant financial innovations in recent years.
Aggressive regulation could allow listed funds and financial instruments to purchase cryptocurrencies domestically without having to leave the country.
Brazilian investment funds are only allowed to buy crypto assets on regulated exchanges. This has created scenarios in the past where funds wishing to allocate part of their investment in cryptocurrencies had to rely on international exchanges regulated in another jurisdiction.
Anything that bridges liquidity between multiple jurisdictions and Brazil is a very interesting opportunity. The bureaucratic processes faced by international investors are less complicated and local companies have access to more capital.
“Brazilians have benefited greatly from financial and technological innovations such as the rise of fintech and the adoption of blockchain, resulting in greater access to cheaper credit, greater investment and increased trading of cryptocurrencies. I think they do,” said Adaime.
A DeFi initiative involving Brazilian stablecoins such as the Cerro Brazilian Real (cREAL) and the Brazilian Digital Token (BRZ) aims to enable international stablecoin holders to fund local SMEs. facilitating foreign direct investment.
Brazil is a highly economically isolated market from the rest of the world due to the restrictive nature of its currency. We do not have a bank account for , which makes the local currency very strong.” Cesar added:
“Naturally, local players expect regulators to be tough on international players, ensuring they have a better fighting chance.”
Brazilian international exchanges such as Binance, ByBit and Crypto.com were expanding rapidly, dominating the market with better products, liquidity and a highly liquid and globally integrated book.
A group of local exchanges have been vocal about international exchanges operating without any regulation in Brazil. These local exchanges played a major role in ensuring that a parliamentary vote was taken as soon as possible.