Throughout 2021, the Brazilian cryptocurrency market managed to disassociate itself from the sides of the police and eventually gain acceptance among the general public, be it in the financial market or even in the greatest national passion: football.
Last year, Bitcoin (BTC) acted as a strong alternative to the Brazilian real, which ended 2021 by breaking negative records and depreciating 6.5% through December, making it the 38th worst-performing currency in the world.
In a year of ups and downs for Bitcoin, the largest cryptocurrency bottomed out at R$167,000 in January and rose to R$355,000 in May along with global markets. Amid bitcoin’s plunge, the BRL/BTC pair remained firm below 200,000 reals until August, when it started to rally to a new all-time high of 367,000 reals on Nov. 8.
Faced with the need for economic protection, Brazilians turned to crypto. According to CoinMarketCap, 10 million Brazilians are now participating in the crypto market.
In traditional financial markets, the Brazilian stock exchange introduced exchange-traded funds (ETFs) linked to bitcoin and ether (ETH) for the first time. Five ETFs are already listed on B3, some of which are among the most profitable in the entire Brazilian stock market in 2021.
The Central Bank of Brazil also announced new developments in the digital real, a central bank digital currency (CBDC), which could be launched as early as 2023. The Central Bank of Brazil also announced that it will continue to work on integrating blockchain technology into its services by conducting a series of tests by a dedicated Monetary Authority team.
In the federal congress, discussions on the regulation of cryptocurrencies in Brazil dragged on throughout the year, until in December federal lawmakers approved bill 2303/15, which sets criteria for the regulation of cryptocurrencies in the country. The bill will continue to be discussed in the plenary session of the House of Representatives in 2022 and later in the Federal Senate.
2021 saw tensions between the major players in the cryptocurrency market in Brazil, but also some good news.
Brazilian exchanges competed against major crypto exchange Binance. Exchanges across the country worked with the Brazilian Cryptoeconomics Association to adapt Binance to comply with the rules of the Brazilian Securities and Exchange Commission, the Federal Tax Administration and the Central Bank. The world exchange is still negotiating with the Brazilian market regulator and the country’s financial authorities.
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On the other hand, Brazil’s largest exchange, Mercado Bitcoin (MB) — now one of Latin America’s crypto unicorns — expanded its operations in the country and entered the sports world once and for all. MB also worked with Chiliz to make fan tokens more accessible to Brazilian fans, a novelty that has been adopted by national football giants such as Corinthians, São Paulo, Internacional, Atlético-MG and Flamengo.
The non-fungible token (NFT) market also reached Brazil with wide acceptance and presence of Brazilian players in play-to-earn games, collecting platforms and even art created by visual artists and renowned names in Brazilian music such as André Abujamra and Zeca Baleiro were taken over.
For the next year, we can expect even more big Brazilian and Latin American companies to enter the cryptocurrency market. The Brazilian exchange is hoping to expand its offering of cryptocurrency-linked investments, with experts targeting decentralized finance (DeFi), NFTs, and the Metaverse.
It is also worth remembering that 2022 is an election year in a country polarized since 2016, with the Bolsonaro government suffering from low popularity and marred by social tensions. The election could not only affect the direction of the digital real, but also the future of the Brazilian economy, including cryptocurrency markets.