A year of mass adoption for cryptocurrencies in Brazil

Throughout 2021, the Brazilian cryptocurrency market managed to distance itself from the pages of the police and finally won acceptance with the general public, both in the financial market and even in its biggest national passion: football.

Last year, Bitcoin (BTC) served as a powerful alternative to the Brazilian real that ended 2021 by breaking negative records and reaching a devaluation of 6.5% by December, making it the 38th worst currency in the world.

In a year of ups and downs for bitcoin, the largest cryptocurrency reached a bottom of 167,000 riyals in January and along with global markets it rose to 355,000 riyals in May. In the face of Bitcoin’s decline, the BRL/BTC pair remained stuck below 200,000 riyals until August, when it started to rise to a new all-time high of 367,000 riyals on November 8.

Faced with the need for economic protection, Brazilians have turned to cryptocurrencies. 10 million Brazilians now participate in the cryptocurrency market, according to CoinMarketCap.

In the traditional financial markets, the Brazilian Stock Exchange first launched Exchange Traded Funds (ETFs) linked to Bitcoin and Ether (ETH). There are already five ETFs listed on B3, some of which are among the most profitable in the entire Brazilian stock market in 2021.

The Central Bank of Brazil also announced new developments in the real digital currency, a Central Bank Digital Currency (CBDC), which could be launched as early as 2023. The Central Bank of Brazil also announced that it will continue to work on integrating blockchain technology into its services. By conducting a series of tests through a specialized team in the Monetary Authority.

In the Federal Congress, discussions about regulating cryptocurrencies in Brazil continued throughout the year, until in December, federal lawmakers approved Bill 2303/15, which sets the standards for regulating cryptocurrencies in the country. The bill will be discussed further in 2022 in the House plenary and later in the Federal Senate.

There was tension among the major players in the cryptocurrency market in Brazil in 2021, but there was also some good news.

Brazilian exchanges have entered the competition with major cryptocurrency exchange Binance. Exchanges across the country have worked with the Brazilian Cryptoeconomics Association to comply with Binance to follow rules set by the Brazilian Securities and Exchange Commission, the Federal Revenue Service, and the Central Bank. The global exchange is still negotiating with the Brazilian market regulator and the country’s financial authorities.

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On the other hand, the largest exchange in Brazil, Mercado Bitcoin (MB) – today one of the cryptocurrencies in Latin America – expanded its operations in the country, entering the world of sports once and for all. MB has also worked alongside Chiliz to make fan tokens accessible to Brazilian fans, a novelty that national football giants such as Corinthians, São Paulo, Internacional, Atlético-MG and Flamengo have embraced.

The non-fungible tokens (NFT) market has also reached Brazil with widespread adoption and presence of Brazilian players in play to make money games, collectible platforms and even in the arts, espoused by visual artists and famous names in Brazilian music like André Abujamra and Zika Ballero.

Next year, we can expect more major Brazilian and Latin American companies to enter the cryptocurrency market. The Brazilian stock exchange is hoping to expand its offering of crypto-related investments, with experts targeting Decentralized Finance (DeFi), NFTs and Metaverse.

It is also worth noting that 2022 is the year of elections in a country that has been polarized since 2016, with Bolsonaro’s government suffering from declining popularity and defined by social tension. The elections could affect not only the direction of the digital real but also the future of the Brazilian economy, including the cryptocurrency markets.