Brazil’s central bank chief, Gabriel Galipolo, announced that the use of crypto assets in the country had surged significantly over the past two to three years, with approximately 90% of the transactions involving stablecoins. These digital assets class pegged to real-world currencies like the U.S. dollar, are favored for their relative price stability compared to more volatile cryptocurrencies such as bitcoin.
Speaking at a Bank for International Settlements event in Mexico City, Galipolo highlighted that this surge in stablecoin usage is primarily driven by the demand for cryptocurrencies as a payment method. He noted that much of the activity is linked to international purchases, creating challenges for both oversight and regulation.
Galipolo stated: “Most of that is to buy things and to shop things from abroad.” He also pointed out that this trend complicates taxation efforts and raises concerns about potential money laundering activities. Galipolo's remarks come amid growing concerns over the increasing use of digital assets for cross-border transactions.
While the popularity of stablecoins reflects a broader adoption of cryptocurrencies, it also brings with it the need for more robust regulatory frameworks to address risks related to financial crimes and tax evasion.
The central bank chief emphasized that the rise in crypto usage has created "an opaque vision" for regulating financial flows, particularly as the country continues to grapple with these issues. He stressed that addressing such challenges is critical to ensuring the integrity of Brazil's financial system as digital assets become more widely accepted.
Brazil’s Drex: Aiming to Improve Credit Access
In his speech, Galipolo also discussed Brazil's forthcoming Drex, a digital asset infrastructure designed to improve credit availability by utilizing collateralized assets. Contrary to some views that see Drex as a central bank digital currency (CBDC), Galipolo clarified that it is not a CBDC but a tool to facilitate access to credit.
He explained that the lack of widespread guarantees in Brazil’s economy leads to high local financing costs, a situation Drex aims to address through its innovative use of distributed ledger technology.
Drex will initially focus on wholesale interbank transactions but will eventually offer retail access based on tokenized bank deposits, adding a new layer to Brazil’s digital financial ecosystem.
Pix System and International Payment Integration
Galipolo also discussed the potential for Brazil’s instant payment system Pix to integrate with international payment networks. He emphasized that Pix’s programmability could help facilitate cross-border transactions, potentially streamlining payments throughout the Americas.
As Brazil navigates its growing crypto adoption and evolving financial landscape, these developments mark an important step in the country’s efforts to modernize its payment systems while addressing the regulatory and operational challenges posed by digital currencies.
