Stablecoin Tether (USDT) has emerged as the dominant cryptocurrency in Brazil, accounting for 80% of all crypto transactions in the country, according to data from Brazil’s revenue service agency. In fact, USDT transactions in Brazil this year reached a staggering $271 billion Brazilian reais (~$55 billion), nearly double the volume of Bitcoin (BTC) transactions, which stood at $151 billion reais (~$30 billion). Stablecoins are designed to maintain a stable value by pegging them to fiat currencies such as the U.S. dollar and the Brazilian real.
The rise of USDT in Brazil has been ongoing since 2021, and it surpassed Bitcoin’s volume for the first time in July 2022. This occurred during a difficult period for the crypto industry, as popular crypto lenders Three Arrows Capital and Voyager Capital collapsed. Despite this, stablecoins like USDT continued to gain traction, indicating the value and trust placed in these assets by Brazilian investors.
The growth of stablecoin adoption in Brazil is further highlighted by the fact that the volume of crypto transactions in the country declined by almost 25% in 2022, amounting to $154.4 billion reais (~$31 billion) by the end of the year. This decrease can be attributed to the crypto winter that affected the industry globally.
To monitor crypto-related activities in the country, the Brazilian tax agency has implemented a sophisticated system that relies on artificial intelligence and network analysis. This system not only detects suspicious activity but can also trace the location of individuals involved in cryptocurrency trading, helping ensure compliance with regulations.
In a bid to regulate crypto investments held by its citizens overseas, the Brazilian government recently passed legislation recognizing cryptocurrencies as “financial assets” for tax purposes. Starting in January 2024, earnings between 6,000 and 50,000 reais (~$10,000) from overseas investments will be subject to a 15% tax rate. Above this threshold, taxes will be applied at a rate of 22.5%. This move aims to create a more transparent and regulated environment for crypto investments in Brazil.
Furthermore, since 2019, crypto exchanges operating in Brazil have been required to disclose all user transactions to the government. Capital gains exceeding 35,000 reais (~$7,000) per month from crypto sales are subject to a progressive tax bracket ranging from 15% to 22.5%. This further ensures that crypto investors in Brazil are complying with tax regulations while contributing to the country’s economy.
The Brazilian cryptocurrency market is a vibrant mix of global exchanges like Coinbase, Binance, Bitso, and Crypto.com, alongside local players such as Mercado Bitcoin and Foxbit. The presence of both global and local exchanges not only provides a diverse range of trading options for Brazilian investors but also contributes to the growth and development of the overall crypto ecosystem in the country.
In conclusion, the surge in USDT adoption in Brazil has positioned stablecoins as the dominant cryptocurrency in the country. This highlights the trust and reliance placed on stablecoins by Brazilian investors, especially during challenging times in the crypto industry. As the Brazilian government continues to regulate and tax crypto investments, it seeks to foster a transparent and compliant environment for crypto transactions while ensuring the growth and stability of the sector in the country.
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