Brazil is experiencing an extraordinary surge in the adoption of Tether (USDT), solidifying its position as the leading cryptocurrency in the country. According to data from Brazil’s revenue service agency, USDT now accounts for a remarkable 80% of all cryptocurrency transactions in the nation.
As of mid-October this year, USDT transactions in Brazil have reached an astounding $271 billion Brazilian reais, equivalent to approximately $55 billion USD. This impressive figure is nearly double the volume of Bitcoin transactions in the country, which amounted to $151 billion reais, roughly $30 billion USD.
Stablecoins, including USDT, are cryptocurrencies designed to maintain a stable value by pegging their worth to fiat currencies such as the U.S. dollar and, in this case, the Brazilian real.
USDT’s rise to prominence in Brazil’s crypto market can be traced back to 2021 when it started gaining traction. However, the turning point came in July 2022 when it surpassed Bitcoin in transaction volume, marking a significant moment during the crypto industry’s turbulent period, which witnessed the collapse of major players like Three Arrows Capital and Voyager Capital.
The subsequent crypto winter had a significant impact on Brazil, resulting in a nearly 25% decrease in crypto transactions in 2022, totaling $154.4 billion reais or approximately $31 billion USD, as reported by the government.
Brazil’s tax agency has been closely monitoring its citizens’ crypto-related activities, utilizing an advanced system powered by artificial intelligence and network analysis. This system can identify suspicious transactions and track the geographical locations of individuals engaged in cryptocurrency trading.
In addition to domestic scrutiny, the Brazilian government has extended its oversight to its citizens’ crypto investments held abroad. On October 25th, the local Congress passed legislation categorizing cryptocurrencies as “financial assets” for tax purposes regarding foreign investments. Starting in January 2024, earnings between 6,000 and 50,000 reais (approximately $10,000 USD) will be subject to a 15% tax rate. Taxes will increase to 22.5% above this threshold.
Since 2019, Brazilian crypto exchanges have been required to disclose all user transactions to the government. Furthermore, capital gains resulting from crypto sales exceeding 35,000 reais (approximately $7,000 USD) per month are subject to a progressive tax rate ranging from 15% to 22.5%.
Brazil’s crypto landscape features a diverse mix of global and local exchanges that cater to its growing crypto community. Established global players such as Coinbase, Binance, Bitso, and Crypto.com have a strong presence in the country. They operate alongside local entities like Mercado Bitcoin and Foxbit, contributing to the vibrant and continuously expanding crypto ecosystem in Brazil.
