Brazil's crypto market strengthens with arrival of new players

UPI

a day ago

Brazil has emerged as a cryptocurrency pioneer, establishing a clear, transparent and collaborative legal framework for the oversight and accounting of digital assets. Photo by gerald/ Pixabay
July 7 (UPI) -- Brazil's foothold in the rapidly expanding cryptocurrency market has grown stronger with the entry of U.S.-based trading platform Webull and crypto mining infrastructure firm Enegix.
The global rise of cryptocurrencies has presented serious regulatory challenges for governments and central banks. In that context, Brazil has emerged as a pioneer, establishing a clear, transparent and collaborative legal framework for the oversight and accounting of digital assets.
According to data from Chainalysis, Brazil accounted for more than 30% of all cryptocurrency transaction volume in Latin America in 2024 -- the highest in the region.
Last week, Central Asian crypto mining firm Enegix Global announced plans to open a data center in the northeastern state of Piauí. State officials said company representatives signed a memorandum of understanding with local authorities and met with Gov. Rafael Fonteles to discuss the project.
Meanwhile, fintech firm Webull Corporation (NASDAQ: BULL) announced June 26 that it is reentering the cryptocurrency market, selecting Brazil as the first launch region in its renewed global rollout.
The company has a market capitalization of $5.17 billion and reported gross margins of 79.73%. Webull said it is targeting emerging markets with robust regulatory frameworks.
Brazil's progress in the cryptocurrency sector is closely tied to its Virtual Assets Law, which established the foundation for regulating services involving digital assets.
The law, in effect since 2022, designates the Central Bank of Brazil as the lead regulatory authority while maintaining the oversight role of the Securities and Exchange Commission of Brazil for crypto assets classified as securities.
The Central Bank has launched a series of key initiatives to build out the regulatory framework, addressing legal and accounting gaps that had previously left parts of the crypto market in a gray area.
Francisco Santos, a crypto trading and investment adviser, said one of the bank's priorities is clarifying the legal and accounting treatment of widely used crypto mechanisms, such as staking and airdrops.
"Staking, which allows users to lock their cryptocurrencies to support blockchain networks in exchange for rewards, and airdrops, where cryptocurrencies are distributed for free to holders of other tokens, have often generated income that goes undeclared or is misreported. The law brings more transparency and structure," Santos said.
Brazil's crypto regulations aim to improve how digital asset activity is recognized in financial reporting. That includes defining how crypto-related mechanisms should be recorded in the financial statements of both companies and individuals, ensuring greater transparency and proper taxation.
The framework also supports more accurate market valuation of digital assets and improves the quality of data reported by companies operating in the crypto sector, strengthening oversight and accountability.
The Central Bank of Brazil has placed particular emphasis on licensing and supervising cryptocurrency exchanges and other virtual asset service providers, or VASPs. These entities must obtain operational licenses and meet minimum standards for security and compliance with anti-money laundering and counter-terrorism financing rules.
Another key part of Brazil's strategy is its commitment to public participation and open dialogue with the crypto industry.
"Through public consultations and discussion forums, the Central Bank has gathered input from civil society, entrepreneurs, developers and the crypto industry itself. This collaborative model not only strengthens the regulatory process, but also enhances institutional legitimacy and supports effective implementation," Santos said.
Not everyone shares such an optimistic view. Maria Silva Souza, an attorney specializing in investment firms, said the cryptocurrency market carries inherent risks despite government-led initiatives.
"Cryptocurrencies are highly volatile. While regulation offers investor protection, it doesn't eliminate the risk of sharp fluctuations that can lead to significant losses -- especially for less-informed retail investors," Souza said.
She added that despite efforts to improve transparency, the crypto ecosystem remains a target for pyramid schemes, fraudulent offerings and sophisticated scams.
"Exchanges and crypto service providers are vulnerable to cyberattacks, hacks and other technological weaknesses. Regulation sets security standards, but no system is infallible. A successful attack could compromise users' funds and data," she said.