Welcome to Latam Insights Encore, a deep dive into Latin America’s most relevant economic and cryptocurrency news from the past week. This edition examines how the Brazilian government is divided regarding crypto, and how this might affect the growth of its crypto economy.
Latam Insights Encore: Brazil, Still Not a Pro Crypto Country
Brazil, one of the largest economies in the world, has recently given mixed hints regarding its future stance on crypto. While lawmakers passed a cryptocurrency law back in 2022, that was finally sanctioned by President Lula in 2023, the rules regarding the treatment of certain crypto asset classes, like stablecoins, are still being debated.
And, taking into account recent statements by central bank officials, the prognosis is not the best. In a bill submitted to public consultation, the central bank proposed for dollar-pegged stablecoins to be treated in the same fashion that foreign currency, opening a compliance hell for crypto exchanges seeking to operate with these in the country.
If approved, this would have very negative effects on the Brazilian crypto environment, given that exchanges would have to opt in for two different licenses, one as crypto exchanges and another as a foreign exchange operators.
In addition, this would ban Brazilians from owning crypto in self-custody wallets, and also exclude them from operating in decentralized exchanges, where stablecoins have a major presence.
Recent statements from the newly appointed President of the Central Bank of Brazil, Gabriel Galipolo, also hint at an upcoming negative stance on crypto and especially stablecoins. Galipolo linked the stablecoin boom in Brazil to illegal usage, stating that these were leveraged to facilitate illicit use cases involving tax evasion and money laundering.
While Brazil has the potential to become a big crypto nation, given the size and characteristics of its economy, it still lacks the pro-crypto leadership that other countries like El Salvador and the U.S. have.
President Lula is an anti-dollar and pro-national currency individual, but this doesn’t automatically translate into a pro-crypto stance, and this is hurting the possibility of Brazil entering the list of global crypto havens even with positive drafts being introduced in the National Congress.
Read more: Brazilian Lawmaker Proposes Bill to Allow Investment Funds to Buy Crypto
Source: Bitcoin
