Brazil’s cryptocurrency market is booming, with stablecoins leading the charge. Gabriel Galipolo, president of Brazil’s Central Bank, shared the news on Feb. 6. He noted that cryptocurrency use in Brazil has skyrocketed in the last two to three years. Around 90% of the transactions are linked to stablecoins, which are less volatile than other cryptocurrencies like Bitcoin due to their ties to real-world assets like the U.S. dollar.
Stablecoins adoption surges for payments and shopping
Galipolo spoke at a Bank for International Settlements conference in Mexico City. He emphasized that stablecoins are increasingly a source of payments, specifically for cross-border purchases. That raises concerns about supervision and regulation, in Galipolo’s opinion. It is increasingly challenging to track transactions, opening a window for such abuses as tax evasion and money laundering, Galipolo continued.
Instead, Drex will extend credit availability through collateralized assets. Galipolo supplemented that Brazil’s lending environment is hindered by high lending costs locally and a lack of warranties. In his view, Drex will use distributed ledger technology to streamline interbank transactions, improving Brazil’s financial infrastructure.
The goal of Drex is to counteract Brazil’s high-interest lending through a more efficient infrastructure. It will not be for general use in a similar way to a CBDC. It will have retail access through tokenized bank deposits, offering ordinary citizens access to assets in a secure banking infrastructure.
Looking to the future, Galipolo referenced Brazil’s new payment system, Pix, that took off in a relatively short span of time. Galipolo foresees a future for integration of Pix with international networks for immediate payments. With its programmability, cross-border payments between both America’s could become a whole lot easier.
Overall, while stablecoins have a stronghold in Brazil, its government continues to prioritize its infrastructure in an effort to make its financial environment even more accessible. Galipolo’s comments echo a larger drive for innovation with a balancing act in regards to minimizing the risks involved with new technology.
