Data from Brazil’s revenue service agency, Receita Federal do Brasil (RFB), revealed Wednesday that Tether (USDT) had gained significant popularity in the country, representing 80 percent of all digital currency transactions.
By mid-October, USDT transactions in Brazil for this year reached approximately $271 billion Brazilian reais ($55 billion), nearly twice the amount of Bitcoin (BTC) transactions in the country, which stood at $151 billion reais (U.S. $30 billion).
USDT transactions in Brazil began surging in 2021 and, for the first time, surpassed Bitcoin in July 2022. This happened during the peak of the crypto industry’s turmoil last year, coinciding with the collapses of crypto lenders Three Arrows Capital and Voyager Capital.
The crypto winter reduced crypto transaction volume in the country by almost 25 percent in 2022, with the year ending at $154.4 billion reais (around U.S. $31 billion), according to government reports.
On October 25, the local Congress passed a law that labels cryptocurrencies as financial assets for tax purposes in foreign investments.
Starting in January 2024, earnings abroad ranging from 6,000 to 50,000 reais (approximately U.S. $10,000) will be taxed at a 15 percent rate. Beyond this amount, a 22.5 percent tax rate will apply.
Daniel Maeda from Brazil’s Comissão de Valores Mobiliários (CVM) revealed at the recent Rio Innovation Week that it was considering a second regulatory sandbox for asset tokenization, with a possible launch in 2024. He explained that the decision to explore another sandbox came after the first sandbox saw around $36 million in assets tokenized.
“We do not define specific cases because we want to let innovation reach the CVM without prior limitations,” Maeda said. “But some areas for the application of tokenization certainly catch our attention, such as agribusiness and [environmental, social and governance].”
He said the CVM planned to wait for changes related to Brazil’s crypto market, including those involving Brazil’s central bank digital currency, the Drex. Maeda emphasized that the securities regulator and central bank should consider developments in the digital asset space and learn from the regulatory approaches adopted by other countries.
“What I can say is that we, at CVM, saw many benefits in this market to leverage processes. Through tokenization, the investor gains in transparency and lower costs, in addition to increasing the democratization of investments, which are values that the commission carries,” Maeda said.
Earlier on June 14, Brazil’s president Luiz Inácio Lula da Silva signed a law under government decree No. 11.563, which outlines the roles of the Brazilian central bank and securities regulator concerning cryptocurrencies.
This law is based on a December 2022 legal framework for crypto in Brazil. It allows the Central Bank of Brazil to oversee virtual asset service providers and ensure that token projects considered securities will still be regulated by the CVM.
Cointelegraph Brazil reported that the CVM had wanted to make rules that fit the size of crypto trading in Brazil and other growing markets. The new law, effective on June 20, did not change some rules related to protecting consumers and preventing financial crimes.
Brazil currently aims to launch a program to issue ID documents using a private blockchain in November to safeguard investors’ data and reduce fraud.
Rio de Janeiro, Goiás and Paraná will lead the way in using a private blockchain created by Brazil’s national data processing service, Serpro, to issue ID documents.
A government decree on September 25 says the whole country will be able to issue identity documents using blockchain technology by November 6.
Alexandre Amorim, the head of Serpro, emphasized that the unchangeable nature and decentralization of blockchain technology make it perfect for Brazil’s digital ID project.
“Blockchain technology plays a critical role in protecting personal data and preventing fraud, offering a more secure digital experience for Brazilian citizens. Utilizing the b-Cadastros blockchain platform significantly enhances the security and reliability of the National Identity Card project,” Amorim said.
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