Brazil will ramp up its oversight over the digital asset sector amid a 44% spike in investment in the first eight months of the year, the central bank governor has revealed.
Roberto Campos Neto pledged to enhance digital asset regulation in the Latin American country to protect investors and curb ‘crypto-related crime.’ He spoke before the National Congress’ Finance and Taxation Commission, three months since the central bank was appointed the country’s digital asset watchdog.
Neto told the lawmakers that the Banco Central do Brasil, the country’s central bank, had noticed a surge in “digital currency imports” in the first eight months of the year. Digital asset investments shot up by 44.2% from January to August, compared to a similar period last year, to hit 35.9 billion Brazilian reals ($7.4 billion).
The governor revealed that demand for stablecoins has increased this year, with most holders using these “dollar-pegged” tokens for payments rather than investments. This necessitates tighter regulations to protect the stablecoin users and the country’s financial stability, Neto noted.
The governor added that the central bank wants to weed out crime from the digital asset industry. Brazilians have lost billions of dollars to ‘crypto’ fraudsters over the years, with the latest being a $61 million scam that involved football legend Ronaldinho Gaucho.
“We understand that a lot is connected to tax evasion or linked to illicit activities,” Neto told the legislators.
Brazil has dominated the digital asset world in Latin America, ranking first for adoption in the region and ninth globally, as per Chainalysis data. About 5% of Brazilians, or 10 million people, are estimated to own digital assets. This adoption isn’t limited to individuals; over 12,000 companies declared digital assets on their balance sheets in their tax returns last year.
Brazil is also inching closer to a central bank digital currency (CBDC). Named DREX, the CBDC aims to build on the success that the national digital payments network PIX has enjoyed.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: Blockchain provides perfect foundation for CBDC
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