The role of USD exchange in Brazil's crypto market: From "high-interest emerging markets" to the global digital asset testing ground

As the global crypto asset market searches for the next growth pole, Brazil is becoming an undeniable answer. Not only has this country attracted the attention of international capital, but more importantly, it demonstrates how a crypto market can deeply integrate with the traditional financial system. Especially on the core issue of residents and enterprises exchanging dollars through stablecoins, Brazil offers a relatively mature solution.

The True Face of Latin America’s Leading Crypto Player: Market Size and Stablecoin Dominance in Brazil

Brazil has become Latin America’s largest and fastest-growing cryptocurrency market. According to the “2025 Cryptocurrency Geography Report” released by on-chain data analysis firm Chainalysis, the value of crypto assets flowing into Brazil in 2024 was approximately $318.8 billion, with a month-over-month growth rate of 109.9%. This accounts for about one-third of the total inflow in Latin America and ranks fifth in the global crypto adoption index.

Market activity is better reflected in trading volume. According to the latest statistics from the Brazilian Federal Revenue Service, reported cryptocurrency trading volume reaches $6 billion to $8 billion per month, with an upward trend. Flavio Correa Prado, an auditor from the department, predicted at the Brazil Blockchain Conference that if this growth continues, the average monthly trading volume could surpass $9 billion by 2030.

The most distinctive feature of the Brazilian market is the absolute dominance of stablecoins. According to a specialized analysis by crypto custody company Fireblocks, stablecoin trading in Brazil accounted for 44.7% in 2024, far above the global average. Gabriel Galípolo, the Governor of the Central Bank of Brazil, revealed in a public speech that when including cross-border payments, exchange settlement, and other segments, about 90% of the country’s crypto assets can be traced back to stablecoin-related operations. This extremely high proportion of stablecoin usage indicates that Brazil’s crypto market is not a speculative paradise but a market with a relatively high degree of “financialization and compliance.”

From B3 Exchange to Nubank Wallet: Brazil’s Mature Crypto Product Ecosystem

Brazil actively promotes the compliance of crypto assets within its system. Its securities exchange B3 (Brasil, Bolsa, Balcão) has become the most diverse platform for crypto products in Latin America. As early as 2021-2022, asset management firms like Hashdex and QR Asset launched multiple ETF products on B3, including Bitcoin, Ethereum, and comprehensive crypto indices.

In September last year, Brazilian regulators made a bold decision to approve the listing of the world’s first Solana single-asset spot ETF on B3, several months ahead of similar products in the US. By mid-2025, B3 had listed over 20 ETF products offering partial or full crypto exposure, covering Bitcoin, Ethereum, DeFi indices, and Bitcoin hybrid portfolios.

In December 2024, US Nasdaq-listed DeFi Technologies announced that its subsidiary Valour was approved to list four new digital asset ETPs on B3, targeting Bitcoin, Ethereum, XRP, and Sui. These products are denominated in Brazilian real and traded through local brokers and custodians. CEO Johan Wattenström stated that Brazil “has become one of the most important and fastest-growing digital asset markets globally.”

At the retail level, a relatively complete ecosystem of participants has formed locally. Mercado Bitcoin and other local exchanges combine order matching, custody, and asset issuance; digital banks like Nubank embed crypto investment features directly into their mobile apps. Nubank’s crypto users in Brazil number around 6.6 million, making it one of the largest crypto banking user bases worldwide; PicPay has over 60 million users and has established dedicated crypto and Web3 departments, focusing on trading, stablecoins, and global accounts.

Data from Circle and Nubank are particularly noteworthy: in 2024, Nubank customers’ USDC holdings increased tenfold, with about 30% of crypto customers holding USDC, and more than half of new users choosing USDC as their first crypto asset. In 2025, Nubank launched an annualized 4% yield plan for USDC holders, officially integrating the functions of dollar stablecoins into banking wealth management.

Rational Choice Under Currency Devaluation: Why Brazilians Need to Exchange for Dollar Stablecoins

Although Brazil’s inflation rate is not as extreme as Argentina’s, its macro environment also poses long-term pressures on residents’ wealth protection. Monitoring by the World Bank and IMF shows that since 2021, Brazil’s inflation has repeatedly exceeded the central bank’s target upper limit. As of August 2025, the CPI year-over-year increase was about 5.1%, still above the 4.5% upper limit.

A more direct threat comes from currency depreciation. Over the past decade, the Brazilian real has experienced multiple significant devaluations against the US dollar: from about 2 BRL/USD in 2013, it once depreciated to above 5 BRL/USD in 2020-2021. Although there has been some recovery in recent years, it remains far weaker than the levels in the early 2010s.

This long-term, slow currency depreciation has profound impacts on middle-class families and enterprises. Many households opt for dollar deposits, offshore accounts, or stablecoins to perform “soft capital flight.” Corporate hedging needs have also increased, with importers, exporters, and commodity-dependent companies urgently seeking more stable value measurement outside their local currency balance sheets.

Brazil has maintained double-digit benchmark interest rates for a long time. Although nominal rates seem high, actual purchasing power remains unstable, providing a market for financial innovations like “interest rate arbitrage.” In this macro context, exchanging for dollars via stablecoins is a rational response by residents and enterprises to local currency fluctuations and capital controls.

Chainalysis summarized three major functions of stablecoins in Latin America: hedging local currency risk, cross-border remittances and trade, and e-commerce payments. The demand for stablecoins among Brazilian residents and enterprises essentially seeks USDT/USDC and other dollar stablecoins as alternatives to offshore dollar accounts.

The improvement of digital payment infrastructure further lowers the threshold for dollar exchange. Brazil’s central bank-led instant payment system Pix has become the main channel for daily transfers and consumption. In 2024, Circle integrated with Pix, allowing Brazilian users to freely exchange between local currency and USDC via local bank transfers within minutes. Payment infrastructure companies like TransFi further innovate by combining stablecoins with Pix for cross-border remittances, e-commerce collections, and freelancer settlements, enabling automatic currency exchange.

From Risk Warnings to Complete Legislation: A Decade of Evolution in Brazil’s Regulatory Framework

The rapid development of Brazil’s crypto market is not the result of sudden deregulation but a ten-year gradual evolution involving the government, markets, and enterprises.

In 2014, when cryptocurrencies first emerged, the Central Bank issued a notice warning about the risks of so-called “virtual currencies,” clarifying that they do not constitute electronic money under Brazilian law. The central bank also stated that at that time, crypto assets posed limited threats to the national financial system but promised ongoing monitoring.

During the ICO boom in 2017, the central bank reiterated that virtual currencies are not subject to Brazil’s financial regulation, are not backed by any sovereignty, are highly volatile, and pose risks of money laundering and illegal activities. The same year, the Securities and Exchange Commission (CVM) issued guidance on ICOs, noting that some tokens might constitute securities and fall under CVM regulation, and explicitly prohibited investment funds from directly holding cryptocurrencies, citing incompatibility with existing legal definitions of “financial assets.” During this period, regulators did not ban individuals and enterprises from holding or using high-risk assets but refused to recognize their status as financial assets.

2019 marked a turning point. The Brazilian Federal Revenue Service (Receita Federal do Brasil) issued normative instructions requiring virtual asset service providers, including exchanges, to report user transaction information to tax authorities; residents conducting large-scale crypto transactions on foreign platforms or OTC must declare and pay income tax. This officially incorporated crypto assets into the tax and foreign exchange management framework.

At the end of 2022, Brazil passed Federal Law No. 14,478, known as the “Crypto Law,” which first established the legal category of “virtual asset service providers (VASP)” and authorized agencies like the Central Bank and CVM to formulate specific rules. In 2023, the government issued regulations to formally include “regulated virtual asset services” within the scope of financial system regulation. Chainalysis noted that this laid the foundation for Brazil to establish the most comprehensive crypto regulatory framework in Latin America.

In 2025, Brazil further refined its legislation on crypto assets. The Central Bank issued Resolutions 519-521, which, within the new foreign exchange legal framework, regard stablecoins denominated in foreign or local currency as a form of digital representation of foreign exchange or claims on foreign currency; institutions providing exchange, cross-border payments, and settlement services must obtain relevant foreign exchange and payment licenses; and the government is also discussing taxation schemes for cross-border crypto payments to prevent regulatory arbitrage.

The key point is that this framework does not treat stablecoins as “illegal dollarization tools” outright but strives to incorporate them into a monitored, taxable foreign exchange system.

Deep Coupling of Crypto and Finance: Brazil’s Global Significance

Looking back at Brazil’s crypto story, what we see is neither a “sudden deregulation and explosive growth” narrative nor a “strict prohibition” crackdown route, but a unique middle path:

Against the long-term background of inflation and currency depreciation, residents and enterprises spontaneously seek hedging tools, leading to stablecoin and dollar exchange demands; mature fintech infrastructure like Pix has naturally embedded crypto assets into existing payment and investment systems; after years of observation and partial restrictions, regulators have chosen to bring this market into a visible and controllable system through taxation, virtual asset laws, and new foreign exchange regulations.

By the end of 2024, international crypto venture capital firm Paradigm announced a $13.5 million investment in Brazilian stablecoin company Crown, marking its first investment in a Brazilian startup. Crown’s BRLV stablecoin is pegged 1:1 to the Brazilian real and backed by Brazilian government bonds. Post-funding, its valuation is approximately $90 million, with a total subscription exceeding 360 million reais, and some media have called it the largest non-dollar stablecoin in emerging markets. This investment is undoubtedly a recognition of Brazil’s market maturity.

Larry Fink, founder of BlackRock, candidly stated at the Wall Street Journal summit—“We are late”—reflecting international capital’s expectations for Brazil’s tokenization of assets. In the coming years, with the advancement of the Drex digital real and more stablecoin and asset tokenization projects, Brazil is likely to continue serving as a global example of “deep integration of crypto and traditional finance,” providing ongoing reference in crypto regulation and market practice.