Stablecoins Lead Cryptocurrency Transactions in Brazil, Says Central Bank President

Stablecoins Lead Cryptocurrency Transactions in Brazil, Says Central Bank President

Brazil has seen a significant rise in cryptocurrency transactions, with stablecoins dominating the market, according to Gabriel Galipolo, president of the Central Bank of Brazil.

Speaking at a Bank for International Settlements event in Mexico City, Galipolo noted that digital asset usage in Brazil has surged over the past three years. He stated that approximately 90% of crypto transactions in the country involve stablecoins, highlighting their central role in the financial ecosystem.

However, Galipolo also acknowledged the regulatory and oversight challenges associated with this trend, particularly in areas such as taxation and anti-money laundering measures.

Drex: A New Financial Infrastructure, Not a CBDC

In his remarks, Galipolo clarified that Brazil’s Drex initiative is not a central bank digital currency (CBDC). Instead, Drex is being developed as an advanced financial infrastructure designed to enhance credit accessibility through tokenized, collateralized assets.

According to Galipolo, Drex will leverage distributed ledger technology (DLT) to facilitate wholesale interbank settlements. Meanwhile, retail users will interact with Drex through tokenized bank deposits rather than direct central bank-issued digital currency.

The Central Bank of Brazil has been actively testing Drex’s integration with tokenization and decentralized finance (DeFi) systems. The project is also undergoing trials to assess its interoperability with other financial networks.

Drex is set to replace the country’s current real-time gross settlement system, Sistema de Transferência de Reservas (STR). Drex coordinator Fábio Araújo described the initiative as “STR 2.0,” emphasizing the need for further refinement before its full implementation.

Brazil’s Crypto Adoption on the Rise

Brazil ranks as the second-largest cryptocurrency market in Latin America, trailing only Argentina. According to a Chainalysis report published on October 9, Brazilian crypto users deposited around $90 billion in digital assets between July 2023 and June 2024.

During this period, stablecoins accounted for 59.8% of the nation’s total crypto transaction volume, with Bitcoin, Ether, and altcoins making up the remainder.

The growing demand for stablecoins has also prompted new market entrants. In August 2024, e-commerce giant Mercado Libre introduced the Meli Dollar, a U.S. dollar-pegged stablecoin designed for the Brazilian market.

Beyond Brazil and Latin America, stablecoins have witnessed global adoption at an unprecedented scale in 2024. These digital assets have even surpassed major traditional financial players in transaction volume.

On January 31, crypto exchange CEX.io reported that total stablecoin transfer volume for 2023 reached $27.6 trillion, exceeding the combined transaction volumes of Visa and Mastercard.

As Brazil continues to embrace digital assets, regulators and financial institutions alike are closely monitoring the implications of stablecoins and blockchain-driven financial innovations.