USDT Dominates Brazilian Cryptocurrency Market, Accounting for 80% of Transactions in 2023

The adoption of Tether (USDT), a stablecoin, has substantially increased in Brazil, comprising 80% of the country’s cryptocurrency transactions in 2023. According to data provided by the Brazilian revenue service, USDT transactions in Brazil reached 271 billion Brazilian reais (approximately $55 billion) by mid-October. This is nearly twice the volume of Bitcoin transactions in the country, which totaled 151 billion reais (around $30 billion).

Stablecoins like USDT are cryptocurrencies designed to maintain a stable value, typically pegged to fiat currencies like the U.S. dollar or the Brazilian real. The rising popularity of USDT in Brazil began in 2021, surpassing Bitcoin in transaction volume for the first time in July 2022, during a tumultuous period for the crypto industry marked by the collapse of major crypto lenders Three Arrows Capital and Voyager Capital.

The crypto winter in 2022 led to a near 25% decrease in the country’s crypto transaction volume, ending the year at 154.4 billion reais (~$31 billion), as reported by the government. The Brazilian tax agency utilizes an advanced system incorporating artificial intelligence and network analysis to monitor citizens’ crypto-related activities, capable of identifying suspicious transactions and pinpointing the locations of individuals trading cryptocurrencies.

The agency is also extending its focus to crypto investments held abroad by Brazilian citizens. On October 25, the local Congress passed a law recognizing cryptocurrencies as “financial assets” for tax purposes on foreign investments. Starting in January 2024, earnings overseas ranging from 6,000 to 50,000 reais (~$10,000) will be taxed at 15%, and earnings above this bracket will face a 22.5% tax rate.

Since 2019, crypto exchanges in Brazil have been mandated to report all user transactions to the government, with capital gains from crypto sales exceeding 35,000 reais (~$7,000) per month subject to a progressive tax bracket ranging from 15% to 22.50%. International crypto exchanges such as Coinbase, Binance, Bitso, and Crypto.com operate in Brazil, alongside local platforms like Mercado Bitcoin and Foxbit.

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