Brazil’s Economic Evolution: Embracing Crypto with Knowledge

Even as global digital asset adoption increases, in some parts of the world a basic understanding of what digital assets are—and what they are not—still impedes growth. This can be true for people across all market sectors, from enterprise executives to policymakers to investors.

In Brazil, the opposite may be true. Public and private sector market participants in Brazil have worked together from the beginning and continue to do so. Both sectors have worked hard to embrace, promote and learn about blockchain and digital assets. 

Crypto hub ambition

Brazil has become a global reference point for crypto enthusiasts. This is due to the region’s social, political and economic volatility as well as the population’s understanding that digital assets can provide significant financial utility to millions of underbanked. 

A key to Brazil’s rapid adoption rates is that the country embraced regulatory discussions early on, and continues to do so. This dynamic is driving social acceptance of the new financial tools. Stakeholders understand that regulation can enable and fortify consumer protections while building trust across all segments of society. 

With national momentum behind them, the Brazilian government is taking the lead in overseeing the creation of more efficient financial rails to help drive financial inclusion. The nation, with the world’s 11th largest economy, wants to bring their 60+ million underbanked citizens into the economy.

An intentional approach to adoption

The pursuit of a Central Bank Digital Currency or CBDC, alongside stablecoins, shows Brazil’s broad acceptance of digital assets and an understanding of the strengths of each. 

In July 2023, BACEN (Brazil’s Central Bank) began onboarding sixteen participants to pilot its new CBDC product called “Drex.” In August 2023, the Central Bank announced Drex had arrived  “… to make life easier for Brazilians.” The pilot is focused on bringing Drex live in mid-2024.

BACEN sees significant future opportunities for digital assets and believes the existence of a CBDC will provide more education and greater trust within the system, thus transforming the Brazilian economy:

      • Brazil’s current financial market infrastructure is inefficient and costly. This causes an increase in operational costs that intermediaries pass on to the consumer. With less friction, costs decrease and systems gain speed.

      • Brazil believes delivery versus payment use cases can optimize inefficiencies. For example, when Brazilian consumers make a large purchase such as a car or real estate, smart contracts can facilitate the transaction without the need for intermediaries—building trust among the population.

      • Brazilian consumers want financial services that are “always on.” A truly global economy must be available at all times. 24/7 access is fundamental to market participants who want to move their money at will, bringing more financial freedom. 

      • Blockchain can drive greater financial inclusion. BACEN believes the pioneering technology can offer more inclusive everyday finance by enabling such practices as microlending and fractionalized investing for lower budget investors. 

    Brazil’s path to finance modernization

    Global consumers need more understanding and exposure to digital assets in order to drive adoption. While Brazil’s adoption is ahead of other countries, its approach shows the rest of the world how to engage citizens with blockchain technology. 

    As a native of Brazil, I have watched my country enjoy the reputation as an early and eager adopter of digital assets and regulation. While we may have been one of the first nations to embrace the technology, there is still a long way to go to make Brazil a financial hub of the future. I see the country progressing as private and public sectors emphasize the importance of education and industry regulation in these and future discussions. 

    With private and public sectors working together, there is a hope that Brazil can become a digital asset destination, bringing with it the promise of an open, efficient and modern financial system.

    Learn more about ways digital assets and blockchain infrastructure can bring efficiencies and access to your enterprise.

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