Latin America's leading crypto market player Brazil, the underrated "top student"

Author: Zen, PANews

“We are late.” Recently, Larry Fink, founder of BlackRock, stated at the Wall Street Journal summit that the United States’ tokenization development needs to keep pace with the global trend to avoid falling behind, with Brazil being seen as a leader in this regard.

This answer was quite unexpected. As one of the world’s top ten economies with a unique geographic location, Brazil is also attempting to extend its national strength into the crypto world.

In December, the capital market of São Paulo, Brazil’s capital, was not short of new stories about “digital assets.”

On December 4th, DeFi Technologies, a Nasdaq-listed company, announced that its subsidiary Valour was approved to list four digital asset ETPs on the B3 main board exchange in Brazil. The products cover Bitcoin, Ethereum, XRP, and Sui, and will be priced in Brazilian real, traded within local brokerage and custody systems. Johan Wattenström, CEO of DeFi Technologies, stated that Brazil “has already become one of the most important and fastest-growing digital asset markets globally.”

On December 8th, well-known crypto venture capital firm Paradigm announced an investment of 13.5 million US dollars in Crown, a Brazilian stablecoin company. This was the first time this San Francisco-based fund had invested in a Brazilian startup.

Crown’s issued BRLV is a stablecoin pegged 1:1 to the Brazilian real, supported by Brazilian government bonds as underlying assets. Post-funding, its valuation is approximately 90 million USD, with a total subscription scale exceeding 360 million reais. Some media have called it one of the largest non-USD stablecoins in emerging markets.

These are not isolated events. In the narratives of international capital and infrastructure providers, Brazil is no longer just a “high-interest emerging market” but is being regarded as the main battleground for Latin America’s digital asset experiments, an underestimated “top student.”

Leading Latin American Cryptocurrency Players

Brazil is now Latin America’s largest cryptocurrency market and one of the fastest-growing markets globally. According to Chainalysis’s 2025 “Cryptocurrency Geography Report,” in 2024, the inflow of cryptocurrency value into Brazil was approximately $318.8 billion, with a month-over-month growth rate of 109.9%. It accounts for nearly one-third of Latin America and ranks fifth in the global cryptocurrency adoption index in 2025.

At the Brazil Blockchain Conference held at the end of November, Flavio Correa Prado, an auditor from the Brazilian Federal Revenue Service, disclosed that, under current regulations, the monthly reported cryptocurrency transaction volume has reached 6 to 8 billion USD. He stated that if the current trend continues, this figure could rise to 9 billion USD per month by 2030. Most of the trading volume comes from stablecoins like USDT and USDC.

In terms of asset structure, Brazil’s market is characterized by the dominance of stablecoins. An analysis by the crypto custody company Fireblocks in April this year pointed out that stablecoins account for 59.8% of the relevant crypto activities in Brazil, far higher than the global average of 44.7%. Official statistics are even more exaggerated; Brazil’s central bank governor Gabriel Galípolo mentioned in a public speech this year that about 90% of the country’s crypto assets, including cross-border payments and exchange settlements, are traceable to stablecoin-related operations.

The highly stablecoin-dominated structure indicates that Brazil is a “more financially developed and compliant” crypto market rather than a pure speculative playground. However, in terms of crypto asset allocation, Brazil is among the earliest markets globally to systematically embrace crypto assets, integrating crypto products into its existing capital markets.

Brazil’s main stock exchange B3 (Brasil, Bolsa, Balcão) is the country’s sole securities exchange, serving as the core market for stocks, bonds, futures, and ETFs. As early as 2021–2022, managers such as Hashdex and QR Asset launched multiple Bitcoin, Ethereum, and comprehensive crypto index ETFs on B3; additionally, the Brazilian regulators approved the world’s first single-asset Solana spot ETF last September, which was listed on B3. This move is considered a bold attempt to approve a Solana spot ETF before the US.

By mid-2025, over 20 ETFs offering full or partial crypto exposure are available on B3, covering Bitcoin, Ethereum, DeFi, and hybrid products like Bitcoin + gold. B3’s official educational website describes crypto ETFs as “practical tools for gaining digital asset exposure within a regulated environment,” emphasizing custody by regulated institutions, valuation in the country’s legal currency real, and inclusion within the national tax framework. Moreover, B3 has launched Bitcoin futures contracts and plans to expand to futures of Ethereum and Solana, providing hedging and arbitrage tools for institutional and high-net-worth investors.

At the retail entry level, Brazil has also developed a fairly complete participant ecosystem. Mercado Bitcoin, a leading local crypto exchange, offers matching transactions, custody, and tokenization asset issuance; the leading digital bank Nubank has embedded a crypto investment module directly into its mobile banking app, with about 6.6 million crypto users in Brazil, making it one of the largest crypto banking platforms globally; another giant, PicPay, with over 60 million users, has established a dedicated Crypto & Web3 unit, focusing on trading, stablecoins, and global accounts.

It is worth mentioning that Circle and Nubank disclosed data showing that in 2024, Nubank’s customers’ USDC holdings grew tenfold, with about 30% of crypto portfolios containing USDC, and over half of new users choosing USDC as their first crypto asset. In 2025, Nubank also launched an annualized 4% yield reward program for USDC holders, formally integrating the stablecoin into banking wealth management.

Parallel “Dollar System” Under Inflation and Devaluation

Compared to Argentina, Brazil is not a high-inflation country in full-blown collapse, but its macro environment has not been friendly to resident confidence.

World Bank and IMF monitoring show that since 2021, Brazil’s inflation has repeatedly exceeded the central bank’s target upper limit, and it rose again from late 2024 to mid-2025. As of August 2025, the CPI year-over-year increase was about 5.1%, above the 4.5% upper target. Over the past decade, the Brazilian real has experienced multiple rounds of significant devaluation against the US dollar: from about 2 BRL/USD in 2013 to above 5 BRL/USD in 2020–2021. Although there has been some recovery in recent years, the value remains far weaker than the early 2010s.

For middle-class households and businesses, this gradual devaluation creates a “boiling frog” effect, leading residents to “dollarize” their savings habits. Many households use US dollar deposits, offshore accounts, or stablecoins to partially “softly escape” assets. Businesses also face rising hedging demands; importers, exporters, and commodity-dependent companies need to find more stable units of value outside their local currency balance sheets. Additionally, Brazil has maintained double-digit benchmark interest rates for many years, with high nominal rates but unstable real purchasing power, creating fertile ground for financial innovations like “interest rate arbitrage.”

Chainalysis’s regional analysis of Latin America indicates that stablecoins serve three main functions in the area: hedging local currency risk, cross-border remittances/trade, and e-commerce payments. Therefore, the intrinsic motivation for Brazil’s stablecoin demand is largely to use USDT/USDC as offshore dollar accounts, driven by rational decisions related to currency fluctuations and capital controls.

The improvement of digital payment infrastructure also facilitates residents’ access to stablecoins. Brazil’s central bank-led real-time payment system Pix is the main channel for everyday transfers and consumption. In 2024, Circle integrated with Pix, enabling Brazilian users to convert freely between local currency and USDC within minutes via local bank transfers. Payment infrastructure companies like TransFi are combining stablecoins with Pix for cross-border remittances, e-commerce collections, and freelancer settlements, achieving automated currency exchange.

Evolution of Brazil’s Regulatory Framework and “Upgrading”

The rapid development of Brazil’s cryptocurrency market is not only driven by inflation and currency volatility but also closely related to its regulatory agencies’ acceptance and regulation. Looking back at the past decade, Brazil’s regulatory trajectory is not simply from nothing to something but has evolved from risk warnings and general legal constraints to systematic legislation and foreign exchange regulation.

In 2014, when cryptocurrencies began to become an emerging force, the Central Bank of Brazil issued a notice warning about the risks of “virtual currencies,” clearly stating they do not belong to the country’s legal definition of electronic money. It also noted that at that time, cryptocurrencies had limited impact on the financial system but that the central bank was monitoring them continuously.

In 2017, during the ICO boom, the Central Bank issued another notice emphasizing that virtual currencies are not regulated by Brazil’s financial system, are not backed by any sovereignty, are highly volatile, and pose risks of money laundering and illegal activities. The same year, the Securities and Exchange Commission (CVM) issued guidance on ICOs, warning that some tokens might constitute securities and fall under CVM regulation. It also clarified that investment funds were not allowed to directly hold cryptocurrencies at that time because they did not meet the existing legal definition of “financial assets.”

During this phase, regulators did not prohibit individuals and companies from holding or using these high-risk assets but did not recognize their status as financial assets and did not allow funds within the regulatory framework to directly allocate to them.

In 2019, Brazil began incorporating cryptocurrencies into its tax and foreign exchange regulatory framework. The Federal Revenue Service issued normative instructions requiring domestic virtual asset service providers, including exchanges, to report user transaction information to tax authorities. Residents conducting certain scale crypto transactions on foreign platforms or OTC also needed to declare them, and related gains were subject to income tax.

At the end of 2022, Brazil moved beyond the general legal framework and passed Federal Law No. 14,478, known as the “Crypto Law,” establishing a legal category for “virtual asset service providers (VASP)” and authorizing administrative agencies (such as the Central Bank and CVM) to formulate specific rules. Subsequently, in 2023, the government issued regulations explicitly including “regulated virtual asset services” within the scope of financial regulation, paving the way for central bank-led detailed rules. Chainalysis’s analysis in 2025 indicated that this laid the foundation for Brazil to establish the “most complete crypto regulatory framework” in Latin America.

This year, Brazil further refined its crypto legislation, with the Central Bank issuing Resolutions 519–521. Under the new foreign exchange law system, stablecoins denominated in foreign or local currency are considered a form of foreign exchange or a claim on foreign currency; institutions providing related exchange, cross-border payment, and settlement services must obtain appropriate foreign exchange and payment licenses; and the government is also discussing tax schemes for cross-border crypto payments to prevent regulatory arbitrage using stablecoins.

This entire framework does not treat stablecoins as “illegal dollarization tools” to be outright banned but aims to include them within a monitored and taxable foreign exchange system.

Overall, Brazil’s crypto story is not a dramatic narrative of “regulation suddenly easing and market exploding overnight,” but rather the result of long-term background factors such as inflation and currency fluctuations prompting residents and enterprises to seek hedging tools; with mature financial technology infrastructure like Pix, crypto assets naturally integrated into existing payment and investment systems; and regulators, after years of observation and partial restrictions, choosing to bring this market into a visible and controllable institutional track through taxation, virtual asset laws, and new foreign exchange regulations.

The Paradigm investment in Crown mentioned at the beginning of this article is just the latest footnote in this process. In the coming years, with the advancement of Drex digital real and the landing of more stablecoins and asset tokenization projects, Brazil is likely to continue serving as a “deeply integrated” example of crypto and traditional finance, providing a continuous benchmark in global crypto regulation and market practice.