Brazil’s Fintech Surge Paves Way for Crypto and CBDC Real Digital

In our latest podcast episode, I interviewed Aaron Stanley, founder of the Brazil Crypto Report (a newsletter and also a podcast) about the ever growing fintech and cryptocurrency sectors in Brazil

We talked about Brazil’s financial landscape, from the fintech boom in the last decade and cryptocurrency adoption  to the new central bank digital currency (CBDC), the Real Digital.

Here are some key takeaways of my conversation with Aaron:

Financial Inclusion: The Key to Brazil’s Fintech and Cryptocurrency Growth

Financial inclusion has played a significant role in Brazil’s fintech and cryptocurrency adoption. Challenger banks, like Brazil’s own NuBank and global Revolut have been instrumental in providing banking and financial services to the unbanked and underbanked population. 

NuBank, a digital native bank, has successfully offered bank accounts and financial services to a large percentage of previously underserved individuals. Similarly, Revolut recently entered the Brazilian market, expanding options for consumers seeking accessible financial services.

The Fintech Revolution: Strong Payment Infrastructure in Brazil

The fintech revolution in Brazil extends beyond cryptocurrencies, as various digital native banks and payment apps have emerged. Mercado Pago, the payments app of giant eCommerce site Mercado Livre, functions as a digital banking service, and digital wallet PicPay, with around 30 million active users, operates similarly to PayPal. These platforms have played a crucial role in driving financial inclusion and fostering the adoption of digital banking services across the country.

Brazil’s Cryptocurrency Adoption: A Closer Look

Brazil’s adoption of cryptocurrencies is nothing short of impressive. Over 2 million Brazilians registered crypto transactions in April  2023 alone, according to the Receita Federal, the Brazilian equivalent of IRS. 

This high adoption rate, which only represents reported transactions, suggests that the actual number of crypto users in Brazil is likely even higher. Moreover, 65,000 individual businesses have reported cryptocurrency transactions, signaling growing acceptance in the business sector.

“Crypto is a perfect fit for Brazilians, because Brazilians love to gamble.” , added Aaron Stanley.

Regulating Cryptocurrencies: Brazil’s Progressive Approach

In addition to fintech adoption, Brazil has made significant progress in regulating cryptocurrencies. The passing of legislation in December has created a regulatory framework, defining key terms and establishing anti-money laundering protections. The central bank has been nominated as the official regulator, tasked with convening public hearings and defining requirements for businesses seeking licenses.

The Digital Real: Brazil’s Innovative CBDC

Brazil’s development of a wholesale Central Bank Digital Currency (CBDC), known as the digital real, sets it apart as an innovative pioneer. The digital real aims to tokenize the entire financial system, improving the efficiency and security of interbank payments. Banks will have the option to mint their own stable coins, facilitating seamless transactions and expanding investment opportunities.

“Every central bank in the world is researching this in some degree, implementing one of these things…But I will say that this is probably like the most innovative CBDC project in the world right now.“, Aaron pointed out in the episode.

Aaron also mentions that the Brazilian Central Bank president, Roberto Campos Neto, is very familiar with the blockchain technology – he used to mine Bitcoin for fun some 10 years or so ago – and has a very progressive mind in terms of innovation.

These aren’t just weird like innovation lab ideas that don’t go anywhere. Like they come up with these things and they actually get implemented, right?“, added Aaron

Concerns and Future Prospects of the Digital Real

However, recent reports have raised some concerns about the digital real. The code of Brazil’s central digital currency pilot enables the central bank to freeze accounts and reduce balances, according to developers and audits of the code. This has sparked a debate about the potential privacy implications of the digital real and the power it gives to the central bank.

You can listen to the full episode here

Main Photo: Roberto Campos Neto, President of Brazil Central Bank – By Senate Agency from Brasilia, Brazil – 130 years of activity of the Federal Court of Accounts (TCU), CC BY 2.0,

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