Author: Zen, PANews

"We are late." Larry Fink, founder of BlackRock, recently stated at a Wall Street Journal summit that the development of tokenization in the U.S. needs to keep pace with global progress to avoid falling behind, and in his view, the leader is Brazil.

This answer is quite unexpected. As one of the top ten economies in the world with a unique geographical position, Brazil is also trying to extend its dream of becoming a strong nation into the crypto world.

In December, the capital market in São Paulo, Brazil's capital, is not lacking in new stories about "digital assets."

On December 4, Nasdaq-listed DeFi Technologies announced that its subsidiary Valour was approved to list four digital asset ETPs on Brazil's main board exchange B3, covering Bitcoin, Ethereum, XRP, and Sui. The products will be priced in Brazilian reais and traded within the local brokerage and custody system. DeFi Technologies CEO Johan Wattenström stated that Brazil "has become one of the most important and fastest-growing digital asset markets in the world."

On December 8, renowned crypto venture capital firm Paradigm announced a $13.5 million investment in Brazilian stablecoin company Crown, marking the first bet by the San Francisco-based fund on a Brazilian startup.

Crown's BRLV is a stablecoin pegged 1:1 to the Brazilian real, supported by Brazilian government bonds as the underlying asset. After this round of financing, its valuation is approximately $90 million, and the cumulative subscription scale of BRLV has exceeded 360 million reais, being referred to by some media as one of the largest non-U.S. dollar stablecoins in emerging markets.

These are not isolated events; in the narrative of international capital and infrastructure providers, Brazil is no longer just a "high-interest emerging market," but is being seen as the main battlefield for digital asset experimentation in Latin America, an undervalued "top student."

Leading Players in Latin American Cryptocurrency

Brazil is now the largest cryptocurrency market in Latin America and one of the fastest-growing markets globally. According to Chainalysis's 2025 Geography of Cryptocurrency Report, the value of cryptocurrencies flowing into Brazil is expected to reach approximately $318.8 billion in 2024, with a year-on-year growth rate of 109.9%, accounting for nearly one-third of the entire Latin American region, ranking fifth in the global cryptocurrency adoption index in 2025.

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

In terms of asset structure, the uniqueness of the Brazilian market lies in the absolute dominance of stablecoins. An analysis by crypto custody firm Fireblocks in April of this year pointed out that stablecoins account for 59.8% of related crypto activities in Brazil, far exceeding the global average of 44.7%. Official statistics are even more exaggerated; Brazilian Central Bank President Gabriel Galípolo mentioned in a public speech this year that about 90% of the country's crypto asset usage can be traced back to stablecoin-related operations, including cross-border payments and exchange settlements.

The highly dominant structure of stablecoins indicates that Brazil is a crypto market with a high degree of "financialization and compliance," rather than merely a speculative paradise. However, in terms of crypto asset allocation, Brazil is actually one of the earliest markets to systematically embrace crypto assets, taking the lead in incorporating crypto products into existing capital markets.

The B3 (Brasil, Bolsa, Balcão), Brazil's main stock exchange, is the only securities exchange in the country and serves as the core market for stocks, bonds, futures, and ETFs. As early as 2021-2022, managers like Hashdex and QR Asset launched multiple Bitcoin, Ethereum, and comprehensive crypto index ETFs on B3; additionally, Brazilian regulators approved the world's first single-asset Solana spot ETF last September, which was seen by many media outlets as a bold attempt to release the SOL spot ETF before the U.S.;

By mid-2025, more than 20 ETFs providing full or partial crypto exposure will be available on B3, covering Bitcoin, Ethereum, DeFi, and mixed products like Bitcoin + gold. B3's official educational website describes crypto ETFs as "practical tools for gaining exposure to digital assets in a regulated environment," emphasizing that custody is handled by regulated entities, priced in the country's legal currency, the real, and incorporated into the national tax framework. Furthermore, B3 has launched Bitcoin futures contracts and plans to expand to futures for Ethereum and Solana, providing hedging and arbitrage tools for institutions and high-net-worth investors.

At the retail entry level, Brazil has also formed a fairly complete spectrum of participants. Local cryptocurrency exchanges led by Mercado Bitcoin combine trading, custody, and tokenized asset issuance; leading digital bank Nubank has directly embedded a crypto investment module into its mobile banking app, with approximately 6.6 million crypto users in Brazil, making it one of the largest crypto user banks globally; another giant, PicPay, has over 60 million users and has established an independent Crypto & Web3 business unit, focusing on trading, stablecoins, and global account products.

Notably, data disclosed by Circle and Nubank shows that in 2024, the USDC balance held by Nubank customers grew tenfold, with about 30% of crypto customer portfolios containing USDC, and more than half of new users considering USDC as their first crypto asset. In 2025, Nubank will also offer a reward program with an annualized return of 4% for users holding USDC, officially embedding the dollar stablecoin into the bank's wealth management logic.

A "Parallel Dollar System" Under Inflation and Devaluation

Compared to Argentina, Brazil is not a "fully collapsing" high-inflation country, but its macro environment is not friendly to residents' confidence.

Monitoring by the World Bank and IMF shows that Brazil's inflation has exceeded the central bank's target upper limit multiple times since 2021, and is expected to rise again from the end of 2024 to mid-2025, with the CPI year-on-year increase in August 2025 expected to be around 5.1%, above the target upper limit of 4.5%. Over the past decade, the Brazilian real has experienced multiple rounds of significant devaluation against the dollar: from about 2 BRL/USD in 2013, it once fell to above 5 BRL/USD in 2020-2021. Even though there has been some recovery in the past two years, it remains far weaker than the levels of the early 2010s.

For middle-class families and businesses, this gradual currency devaluation experience has led to a "dollarization" of savings habits, with many families using dollar deposits, offshore accounts, or stablecoins to conduct partial asset "soft capital flight." On the business side, the demand for hedging has increased, with importers, exporters, and companies reliant on commodities needing to find a more stable unit 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 a strong environment for financial innovations like "earning interest rate spreads."

Chainalysis pointed out in its thematic analysis of Latin America that stablecoins serve three main functions in the region: hedging local currency risk, cross-border remittances/trade, and e-commerce payments. Therefore, the intrinsic motivation for Brazil's demand for stablecoins is to use USDT/USDC as a substitute for offshore dollar accounts, largely as a rational decision against local currency volatility and capital controls.

The improvement of digital payment infrastructure has also facilitated residents' access to stablecoins. The instant payment system Pix, led by the Brazilian Central Bank, is the main channel for daily transfers and consumption. In 2024, Circle integrated Pix, allowing Brazilian users to freely convert between local currency and USDC within minutes using local bank transfer methods. Payment infrastructure companies like TransFi have combined stablecoins with Pix for cross-border remittances, e-commerce payments, and freelancer settlements, achieving automatic currency exchange.

The Evolution of Brazil's Regulatory Framework and "Upgrading"

The rapid development of Brazil's cryptocurrency market is closely linked to the acceptance and regulation by its regulatory agencies, in addition to the intrinsic motivations of currency devaluation. Looking back at Brazil's regulatory trajectory over the past decade, it has not simply evolved from non-existence to existence, but has transformed from risk warnings and general legal constraints to systematic legislation and foreign exchange management.

In 2014, as cryptocurrencies began to emerge as a force that could not be ignored, the Brazilian Central Bank issued a notice warning about the risks of so-called "virtual currencies," clarifying that they do not fall under the legal definition of electronic money in the country. It also stated that at that time, the impact of cryptocurrencies on the national financial system was still limited, but the central bank was continuously monitoring the situation.

In 2017, during the ICO boom, the central bank issued another notice emphasizing that virtual currencies are not regulated by Brazil's national financial system, are not backed by any sovereign guarantees, and are subject to significant price volatility, with risks of being used for money laundering and illegal activities. In the same year, the Securities and Exchange Commission (CVM) released a statement regarding ICOs, reminding the market that some tokens may constitute securities and are subject to CVM regulation, and clarified that investment funds at that time were not allowed to directly hold cryptocurrencies, as they did not meet the legal definition of "financial assets."

During this phase, regulatory agencies did not prohibit individuals and businesses from holding and using this high-risk asset, but they did not recognize its status as a financial asset and did not allow funds within the regulatory system to allocate directly.

In 2019, Brazil began to bring cryptocurrencies under the constraints of tax and foreign exchange rules. Its Federal Revenue Service (Receita Federal do Brasil) issued normative instructions requiring domestic virtual asset service providers, including exchanges, to report user transaction information to the tax authorities; residents engaging in cryptocurrency transactions above a certain scale on foreign platforms or over-the-counter must also fulfill reporting obligations, and related trading profits must be included in income tax collection.

By the end of 2022, Brazil bid farewell to the constraints of a general legal framework and passed Federal Law No. 14,478, known in the industry as the "Crypto Law," which established the legal category of "Virtual Asset Service Providers (VASP)" and authorized administrative bodies (such as the Central Bank and CVM) to formulate specific rules. Subsequently, in 2023, the government issued a decree explicitly incorporating "regulated virtual asset services" into the scope of financial system regulation, paving the way for subsequent detailed rules led by the Central Bank. Chainalysis noted in its 2025 analysis that this laid the foundation for Brazil to establish a "complete crypto regulatory framework" ahead of other Latin American countries.

This year, Brazil further refined its cryptocurrency legislation, with the Central Bank issuing multiple resolutions numbered 519-521. Under the new foreign exchange law system, stablecoins priced in foreign or local currency will be regarded as a digital representation of a foreign exchange or a claim to foreign currency; institutions providing related exchange, cross-border payment, and settlement services must obtain the corresponding foreign exchange and payment licenses; regarding cross-border crypto payments, the government is also discussing tax schemes to prevent regulatory arbitrage using stablecoins.

This entire framework does not categorically ban stablecoins as "illegal dollarization tools," but rather strives to incorporate them into a monitorable and taxable foreign exchange system.

Overall, Brazil's cryptocurrency narrative is not a dramatic story of "sudden regulatory relaxation and overnight explosion," but rather a result of residents and businesses spontaneously seeking hedging tools against the long-term backdrop of inflation and currency volatility; with mature financial technology infrastructures like Pix, crypto assets naturally embed into the existing payment and investment systems; after years of observation and partial constraints, regulatory agencies chose to bring this market into a visible and controllable institutional track through taxation, virtual asset laws, and new foreign exchange regulations.

The investment by Paradigm 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 the Drex digital real and the implementation of more stablecoin and asset tokenization projects, Brazil is likely to continue serving as a model for the "deep coupling of crypto and traditional finance," providing a continuous reference point in global crypto regulation and market practice.

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