Tether Soars as Brazil’s Preferred Crypto Amid Inflation Woes
Key Insights:
- Tether (USDT) skyrockets in Brazil, making up 80% of all crypto transactions in 2023, surpassing the dominant Bitcoin in the financial landscape.
- USDT’s strategic integration with ATMs and payment systems fuels its accessibility and adoption.
- Brazil’s evolving regulatory framework adapts to the crypto boom, ensuring transparency and security for the burgeoning number of cryptocurrency users.
In an unexpected turn of events, Brazil sees a spike in the usage of Tether (USDT), leaving behind even Bitcoin (BTC). According to fresh data from Brazil’s Receita Federal, USDT remarkably covers 80% of all cryptocurrency transactions in the country this year. Consequently, it has firmly secured its position as Brazil’s most favoured cryptocurrency.
USDT’s recorded transactions are $271 billion Brazilian reais (around $55 billion). This figure overshadows Bitcoin transactions, valued at $151 billion reais ($30 billion). The data paints a clear picture: Tether is leading the crypto race in Brazil, outpacing other digital currencies significantly.
The Historical Context and Surge of USDT
Tracing back the roots of Tether’s surge in popularity in Brazil takes us to 2021. The nation was grappling with an inflation rate of 10.06%, the highest since 2015. The Brazilian real (BRL) was steadily losing value against the US dollar, prompting traders to seek refuge in stablecoins. Tether emerged as a top choice, evident from the $9.7 billion USDT acquired by Brazilians between January and November 2021.
In August 2022, Brazilian companies actively engaged in USDT transactions, with nearly 80,000 operations totalling $1.42 billion. The momentum continued into October, with transactions using USDT reaching almost $1.8 billion across 119,366 operations. This data solidifies Tether’s standing in the Brazilian market, showcasing its growing influence and acceptance among traders and businesses.
Tether’s Integration and Accessibility in Brazil
Tether’s dominance in Brazil can also be attributed to its strategic accessibility initiatives. In October 2022, the stablecoin became available at over 24,000 ATMs nationwide. Tether’s partnership with Brazilian payments company SmartPay played a crucial role, facilitating the integration of USDT with Brazil’s payment system PiX and with TecBan, the largest ATM provider in Brazil.
The enhancement in USDT’s availability was a significant outcome of this integration, offering users a seamless and direct route to obtain and utilize Tether for many purposes. This development broadened the horizons for financial engagement and inclusivity, notably for individuals previously marginalized by conventional banking systems.
The Regulatory Landscape and Crypto Adoption in Brazil
Brazil’s position in the global cryptocurrency landscape is noteworthy. Currently, it is the fifth country regarding the number of cryptocurrency owners. The regulatory environment in Brazil has evolved to accommodate the growing interest in cryptocurrencies.
As of late 2022, companies operating in the crypto segment in Brazil need to have a license to use, similar to what is required for financial institutions. They must also obtain a legal entity registration number in Brazil (CNPJ) and report any suspicious activities to the Council for Control of Financial Activities (COAF).
Additionally, every cryptocurrency exchange within the nation’s borders must report every user transaction to the governmental authorities. Should the capital gains generated from trading cryptocurrencies surpass the monthly threshold of 35,000 reais, they become taxable, with rates fluctuating between 15 and 22.50 percent.
The Evolving Role of Stablecoins in Brazil
Beyond USDT, various stablecoins have carved a niche in Brazil’s crypto landscape. Coming in next after Tether, USD Coin (USDC) has seen trading activity amounting to $23.9 billion this year alone.
Notably, BRZ has emerged as the premier non-dollar stablecoin since its 2019 introduction. This ERC-20 token, anchored to the Ethereum blockchain, aims to mirror the Brazilian real on a 1:1 ratio. Its prominence rose sharply in January 2021, underscoring the multifaceted embrace of stablecoins within the nation.
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