Banco Central do Brasil, the nation’s central bank, has taken notice of the substantial rise in cryptocurrency adoption within Brazil. This surge has prompted the bank to take action by tightening regulations concerning digital assets.
Soaring Crypto Imports and Focus on Stablecoins
During a speech to the parliamentary Finance and Taxation Commission on September 27, Roberto Campos Neto, the governor of Banco Central do Brasil, reported a remarkable surge in “cryptocurrency imports” by Brazilian citizens.
According to data from the central bank, crypto imports have surged by an impressive 44.2% from January to August 2023 when compared to the same period in 2022, amounting to a total of approximately 35.9 billion Brazilian reals, equivalent to $7.4 billion.
Governor Campos Neto highlighted the increasing popularity of stablecoins, emphasizing that they are being used primarily for payments rather than investments. In response to these evolving trends, the central bank intends to tighten regulations and extend its supervision to crypto platforms. Campos Neto also pointed out potential issues related to cryptocurrencies, including tax evasion and illicit activities:
“We understand that a lot is connected to tax evasion or linked to illicit activities.”
In June 2023, Brazil granted the central bank a central role in regulating cryptocurrencies. However, it’s worth noting that token projects classified as securities will continue to be overseen by the Comissão de Valores Mobiliários, Brazil’s equivalent of the United States Securities and Exchange Commission.
Brazil’s Own Digital Currency
Apart from tightening regulations, the Brazilian central bank is actively working on developing its own digital currency, known as Drex. In August, the bank unveiled the brand and logo for this central bank digital currency.
Notably, there was a prior controversy surrounding Drex, as Brazilian blockchain developer Pedro Magalhães reportedly discovered functionalities in the Drex code that could potentially allow a central authority to freeze funds or reduce balances. This development adds an interesting dimension to the evolving crypto landscape in Brazil.