The world of cryptocurrencies is slowly entering into the mainstream, as data from Brazil’s central bank shows that Brazilians acquired $4.27 billion worth of cryptos since the start of 2021. Young citizens made most of the purchases as a hedge against inflation cycles amid Brazil’s worsened economic climate due to the COVID-19 pandemic.
Brazilians acquired the most cryptos in April, May, June, and July, with May leading the charts with $756 million worth of cryptocurrencies. Тhe latest push came amid increasing speculations that Brazil could adopt Bitcoin as legal tender, just like El Salvador did two months ago.
Brazil’s central bank monetary policy director Bruno Serra announced that in total, Brazilians hold $50 billion in digital assets, which is three times higher than their total value of U.S. stock holdings.
The amount of holdings pushes Brazil’s government to take a rather liberated stance on cryptocurrencies. Brazil’s regulators are debating a draft legislation to put cryptocurrencies on a regulation basis, rather than implying a widespread ban, like in the case of China. Brazil even approved a list of crypto-based exchange-traded funds (ETFs) on Brazilian exchanges.
For instance, the Sao Paulo stock exchange listed a Bitcoin ETF, while QR Capital opened its doors to an Ethereum ETF.
Brazil’s central bank monetary policy director also noted that the monetary authority managed to create a controlled foreign exchange market that makes it aware of crypto-related transactions. Furthermore, the central bank started to report the transfer of ownership of crypto assets between Brazilian residents and non-residents in the “goods” section of the balance of the payments in August 2021, in conjunction with the International Monetary Fund’s recommended methodology.
However, the regulatory mechanisms have to be created to also protect crypto owners from the criminal elements that promise unrealistic returns on crypto investments, and on money laundering activities. In order to combat money laundering via cryptocurrencies, Brazil’s Câmara dos Deputados passed a bill to turn the screws on the crime of money laundering using crypto in October 2021.
Under the bill, money launderers face prison time for a minimum of four years, as well as the obligation to surrender two-thirds of funds. Аn investigation by the Region of Rio Federal Police recently managed to seize a total of $28 million in a crypto-Ponzi scheme. The police actions managed to put five people behind bars, while in early August, over 30 search and seizure warrants were served.