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An Outlook on the Crypto Market in Brazil for 2022 and Beyond

As the use of crypto accelerated following the onset of the Covid-19 pandemic, more and more people and businesses alike have begun to invest in holding, powering, and managing digital assets.

While Americans have embraced digital assets with great fervor, the adoption story is even greater abroad — in countries like Brazil and the greater Latin American region, crypto holdings are rapidly increasing on the books of businesses and in the wallets of individuals looking to embrace blockchain and escape inflation and economic instability. 

That adoption has meant greater financial accessibility and new economic opportunities for the millions embracing blockchain. Many factors are at play in the widespread adoption of crypto across Latin America.

This article takes a look at the growing adoption of crypto in Brazil and Latin America, including an examination of some of the record-breaking numbers coming out of the region.

Keep reading to learn about the state of the crypto market in Brazil and what to expect from the Latin American region when it comes to crypto adoption in 2023 and beyond.

The Record-Breaking Number of Brazilian Companies Investing in Crypto

This Summer,  a record-breaking number of companies declared cryptocurrency holdings in Brazil, according to an October 2022 report from LiveCoins (an independent news portal about crypto).

LiveCoins’ data came straight from the Federal Revenue of Brazil (RFB), which showed that more than 12,000 CNJBs declared cryptocurrency assets in August 2022. The total value of these holdings was $11 billion Brazilian Real, or roughly $2.15 billion U.S. Dollars.) 

Individual citizens were also stacking their sats in Brazil. A separate report from CoinDesk observed that  Brazil has more than one million registered crypto users, with more than 1.33 million Brazilians making crypto purchases in July 2022 — a 68% increase compared to just one month earlier in June 2022.

What are they buying? Brazilian companies commonly declared two holdings: Bitcoin (BTC) and Tether (USDT). While Bitcoin is one of the most widely known cryptocurrencies, Tether is a stablecoin pegged to the U.S. dollar — it’s the third largest cryptocurrency by market capitalization.

Interestingly, the LiveCoin report further reveals that although the use of Tether remains high, the use of other stablecoins (such as BUSD, the Binance stablecoin pegged to USD) has dropped since August 2022.   

Why Crypto has Grown in Popularity in Brazil

When it comes to why we are seeing growth in cryptocurrency investments and declarations in Brazil, many factors play a role in the Brazilian adoption of crypto.

Here are three of the top reasons why companies and individuals in Brazil are turning to crypto:

1. Unbanking & Financial Accessibility

Billions of people in developing countries  lack traditional financial accounts and services such as checking accounts,  savings accounts, lending services, and credit cards. In Brazil, there are an estimated 34 million residents who are unbanked, or roughly 16% of the entire Brazilian population of 214+ million people.

Blockchain technology and cryptocurrency offer unbanked populations new opportunities to gain financial inclusion and accessibility — in crypto, this is commonly called unbanking.

As both decentralized (not based on any real-world asset or in traditional financial systems) and centralized (pegged to a centralized asset, such as a national currency) cryptocurrencies and decentralized apps continue to grow in popularity, they provide unbanked people with access to many of the same services they’d get from a banking provider or app.

In turn, businesses that invest in crypto holdings not only have the chance to increase their revenues but also tap into large groups of customers who have traditionally been unbanked and, thus, underrepresented in business spaces.

Keeper of the Coin: What Crypto Exchange is King?

2. Greater Economic Opportunities

Around the globe, inflation has taken hold of the worldwide economy. Though inflation rates have recently been dropping in Brazil, the inflation rate remained high at 7.11% in September 2022, compared to the 3.73% level seen in pre-pandemic times in 2019.

As inflation rises, so does the cost of everything — from day-to-day expenses to investing in assets like stocks and real estate.

Embracing cryptocurrencies gives the Brazilian industry new opportunities for economic activity outside of trading real-world assets that have widely been impacted by inflation.

However, it is important to note that cryptocurrency investments are widely considered to be speculative assets that come with their own risks from market fluctuations and unintended associations with real-life assets (for instance, Bitcoin has become largely associated with the technology sector, leading Bitcoin and tech stocks to follow similar patterns.)

3. Increased Trust in Crypto

The final factor behind the growing popularity of crypto in Brazil is that the general public opinion on cryptocurrency and blockchain technology is improving.

Brazil is considered one of the top five countries investing in cryptocurrency, with the other top nations including India, the U.S., Russia, and Nigeria.

Though official regulation of cryptocurrency in Brazil is still very much under development, the country has shown the potential for even government adoption of crypto technology, with the Central Bank of Brazil even planning the development of its own central bank digital currency (CBDC).

Overall, consumers, businesses, and government entities alike have shown an increasing acceptance of cryptocurrency within the national economy, which has undoubtedly helped with its widespread adoption.

Is Latin America Ready to Adopt Crypto?

As the use and popularity of cryptocurrencies in Brazil continue to increase, it begs the question — where does the rest of Latin America stand on the crypto front?

According to a March 2022 report from Bloomberg Línea, the rate of crypto adoption is increasing across the Latin American region. Aside from Brazil — which holds the top position for crypto adoption in Latin America — other major adopters of the technology include Colombia, Mexico, Argentina, and Chile.

Here are some quick facts from the report to consider:

  • •  Argentina is expected to see a rise in crypto adoption from 5.5% to 18.4% in 2022
  • •  A survey in Colombia found that 22.3% of respondents planned to buy digital currencies or tokens in 2022 — previously, only 5.2% of Colombians had such plans
  • •  Mexico is expected to see a 345% increase in crypto adoption in the next 12 months
  • •  Chile is expected to see a 208% increase in crypto adoption in the next 12 months

However, there are obstacles to the widespread adoption of cryptocurrencies that exist not just in Latin America but in almost every economy utilizing cryptos — the biggest of which is a lack of public understanding of how blockchain technology works.

For cryptocurrency to truly become a valuable and long-lasting asset in the Latin American economy, better public education on how to properly use, store, and protect cryptocurrencies is needed.

Final Thoughts: Integrating Crypto APIs is Key for Adoption

As more nations across the globe embrace  cryptocurrencies and digital assets, it is crucial to consider how to integrate these types of payments and assets into a financial system. It’s also important to consider the breadth of users you’ll be serving — crypto is a global industry.

Front has more than 250 APIs available to help you build a more cohesive experience for your users. You can use Front to aggregate user accounts across assets and platforms, track assets like crypto and stocks and transfer crypto assets without triggering a sale. 

To learn more about how Front APIs can help with crypto adoption, contact the Front team today.

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