Brazil has emerged as a burgeoning frontier for cryptocurrency transactions, with Tether leading the charge. The adoption of USDT has skyrocketed, accounting for 80% of all cryptocurrency dealings within the nation.
Rapid Ascension of USDT in Brazil
Come mid-October, the volume of USDT transactions in Brazil for the current year soared to 271 billion Brazilian reais (roughly $55 billion). This figure is notably higher than Bitcoin transactions. Those clocked in at 151 billion reais (around $30 billion). The allure of stablecoins like USDT lies in their stable valuation, often tethered to the worth of conventional fiat currencies such as the U.S. dollar and the Brazilian real.
The traction for USDT transactions started gaining momentum in Brazil as early as 2021. However, it was in July 2022, amid the pinnacle of the cryptocurrency industry turmoil, that USDT volumes leapfrogged over Bitcoin volumes. This shift coincided with the downfall of crypto lenders like Three Arrows Capital and Voyager Capital, marking a pivotal moment in the crypto landscape of Brazil.
The tumultuous crypto winter of 2022 inflicted a sharp 25% plunge in the overall crypto transaction volume in Brazil. It dwindled to 154.4 billion reais, or approximately $31 billion, as documented by the government.
Brazil’s tax authority has employed a sophisticated mechanism to monitor the crypto activities of its citizens. Harnessing the power of artificial intelligence and network analysis, this system adeptly identifies suspicious actions and traces the whereabouts of cryptocurrency traders.
On the legislative front, a significant move came on October 25. Brazil’s local Congress endorsed a bill recognizing cryptocurrencies as “financial assets” concerning overseas investments. From January 2024 onwards, earnings ranging from 6,000 to 50,000 reais will incur a 15% tax rate, while earnings exceeding this limit will face a 22.5% tax rate.
Post-2019, a mandate requires all crypto exchanges operating in Brazil to report user transactions to the government. A progressive tax structure exists for capital gains from crypto sales surpassing 35,000 reais per month. The rates span from 15% to 22.50%.
The narrative of USDT’s dominance in Brazil is a testament to the evolving preferences among cryptocurrency enthusiasts. Stablecoins offer a semblance of stability in the otherwise volatile crypto space. It’s little wonder why USDT has become the go-to choice for many in Brazil.