Brazil is witnessing a “significant surge” in crypto adoption, according to the governor of Banco Central do Brasil — Brazil’s central bank. In the wake of a boom in popularity of crypto in the country, the Brazilian central bank is seeking to tighten the digital assets regulation.
During his speech to the parliamentary Finance and Taxation Commission on September 27, Roberto Campos Neto noted that “cryptocurrency imports” by Brazilians have drastically increased in recent months. Data from Brazil’s central bank shows the country saw a 44.2% jump in its crypto imports from January to August 2023 when compared to last year, with total funds amounting to nearly 25.9 billion Brazilian reals ($7.4 billion).
Also read: Brazil’s oldest bank allows citizens to pay taxes in digital assets
Campos Neto separately emphasized that stablecoins is gaining momentum in Brazil, with more and more citizens choosing stablecoins over other investments to settle payments. In light of strong crypto adoption rates in the country, Brazil’s central bank has decided to tighten regulation and bring crypto platforms under its supervision. The move is aimed at preventing tax evasion or illicit activities, Campos Neto said.
“We understand that a lot is connected to tax evasion or linked to illicit activities.”
Roberto Campos Neto, the governor of Bank of Brazil
Notably, Brazil’s President Luiz Inácio Lula da Silva signed a new legislation in January, which gave the central bank authorization to regulate and supervise virtual asset service providers. The executive order came into effect in June. However, the token projects deemed as securities remain under the purview of the Comissão de Valores Mobiliários — Brazil’s equivalent of the U.S. Securities and Exchange Commission (SEC).
The Bank of Brazil is also laying the foundations for a pilot project that will introduce the country’s central bank digital currency (CBDC), which has since been renamed “Drex”. In August, The Brazilian central bank also revealed the new logo of its digital currency.
In July, controversy erupted in Brazil after a blockchain developer discovered functions in Drex code that could potentially give a central authority control over funds and balances. The discovery raised concerns that introduction of CBDCs could imperil citizens’ financial freedom and privacy. Lawmakers in the US and Sweden have echoed similar sentiments recently.
