#172: Binance becomes Brazil's first exchange to secure broker-dealer license – substack.com

Olá pessoal!

Greetings from Orlando and welcome back to 🇧🇷Brazil Crypto Report for the week of December 23, 2024 to January 3, 2025!

I hope everyone had a great and relaxing holiday season and that you’re reading to kickstart what looks to be a wild 2025. I’ve been running around Orlando Outlet Malls like a madman for the past week so am just catching back up on crypto and will be fully plugged in from here on out.

🙌 Before we dive in, I’d like to send a quick note of appreciation to everyone who has read this newsletter, listened to a BCR podcast, contributed financially or in some other way supported this platform over the last year. It’s been a labor of love for me to produce this content every week, but I find deep satisfaction in knowing that readers and listeners find value in my work. Thank you for your support!

🔎 What’s in this week’s BCR?

• Binance becomes Brazil’s first crypto exchange to secure a broker-dealer license

• “Drex should be an option, not an obligation” says federal deputy

• New tax on crypto exchanges signed into law

Thanks for reading and have a great week!

-AWS

🙌 🇧🇷Brazil Crypto Report is a free publication; if you wish to support my work you can do so by hitting the button below👇

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Binance received approval from the Central Bank of Brazil for its acquisition of Sim;paul — a locally-licensed broker dealer institution with authority to both distribute securities and issue electronic money.

The approval makes Binance the first crypto exchange in Brazil to receive a broker-dealer license, and will help the company comply with ongoing regulatory developments.

This gives Binance a formal license to operate in Brazil and begin offering securities to customers. It allows Binance direct access to the Brazilian financial system for processing bank transfers and Pix payments, allowing it to localize its operations through the Sim;paul platform rather than relying on local intermediaries like Latam Gateway — which it has been using since 2022.

Binance can also now offer other types of financial and investment services beyond crypto trading, such as digital accounts, securities and equities trading, and various types of funds — though the firm says it has no plans to offer products beyond crypto in the short term.

Binance CEO Richard Teng said in a statement:

“We are thrilled to announce our latest regulatory approval. A market with burgeoning crypto adoption, Brazil is home to a vibrant and dynamic community that is readily embracing the future of finance. We thank local regulators for their commitment to defining clear rules for this important, growing industry.

This approval underscores our commitment to compliance and security, and we look forward to continuing to provide our local users with a secure, reliable, and innovative platform for their digital-asset needs.”

The Central Bank of Brazil published the decision to approve the acquisition on the final day of 2024 after more than two years of analyzing the deal. The purchase was first announced in March 2022 during former CEO Changpeng Zhao’s initial visit to Brazil. It was intended to fast-track the exchange’s growth in a future regulated market in the country.

As the Central Bank has yet to formalize its licensing framework for crypto exchanges, it is unclear whether the Sim;paul brokerage license will exempt Binance from needing a VASP license.

Guilherme Nazar, Binance’s head of Latin America, said in a statement:

“This approval marks a significant milestone in our ongoing commitment to expanding our products and services in Brazil. It highlights our dedication to compliance and regulatory excellence while enhancing our ability to provide secure and innovative financial solutions to our growing user base in the country.

We look forward to taking this opportunity to further drive the adoption of digital assets and deliver unparalleled value to our clients in Brazil.”

Putting it all together, Binance is now ideally positioned at the intersection of Brazil’s Tradfi and crypto worlds, particularly given the country’s movement towards building a tokenized financial system via the Drex project.

It’s a remarkable turnaround given the amount of pressure the exchange was under just 12-18 months ago in the Brazilian market. Recall in 2023 that a special congressional committee investigating financial pyramids and illicit crypto behavior formally urged the Central Bank to deny this deal.

Binance is now formally licensed in 21 countries globally, including Argentina, Japan, El Salvador, India, Dubai, etc.

Exame Valor BlockNews Portal do Bitcoin CoinTelegraph Brasil

Federal Deputy Julia Zanatta spoke out against the Drex CBDC project in a live Instagram webinar promoted by Livecoins.

She argued that Drex creates a myriad of new risks to the freedoms of individual Brazilians, and that society at large has not been consulted on the question of whether developing such a system is beneficial. She indicated that she will file a motion in Congress to debate this point.

“The risks are more social control in our lives, lack of privacy, ease of taxing your entire life without option, political persecution and people who do not know how to manipulate technology, making serious financial mistakes. Drex should be an option for Brazilians, not an obligation.”

“No one asked the people if they want Drex, so I’m going to file a plebiscite to raise this debate with the people.”

Zanatta is the author of a bill that would prohibit the extinction of paper money in Brazil in favor of digital currency.

The right thing to do, she said, is for Congress to authorize the issuance of the Drex currency rather than for the Central Bank to make the decision. Note that there is currently legislation introduced in Congress that would do this.

Zanatta also distinguished Drex and bitcoin, emphasizing that the latter is decentralized and cannot be controlled by the state.

“Bitcoin is freedom, and Drex is a centralized digital currency. Is it a path to modernity, to the freedom of Brazilians? We do not deny the benefits of technology, but to what extent is the facilitation worth the exchange of more social control for less freedom?”

CoinTelegraph Brasil Livecoins

The new rules are part of a giant tax reform package passed by Congress and signed into law by President Lula on December 30, 2024.

Among the truckload of changes in the bill is a provision that will tax revenues of crypto exchanges. This will not directly impact individual investors in Brazil, but will affect rather brokerages themselves.

The outstanding question becomes whether or not exchanges will pass on these tax burdens to users or simply cover the tax themselves. Binance has gone on the record stating that it will not pass on these costs to its customers. Guilherme Nazar, VP of Latam, told Estadao’s E-Investidor:

“I would not say that investors would be harmed by this tax that will happen, at least not at Binance. In smaller companies, this may happen. In general, we seek not to impact investors and we will not impose this tax on them.”

Livecoins CriptoFacil

No new podcast this week but I’m re-upping two episodes that I released before the holiday break began. The first is with Binance’s VP of Latam Guilherme Nazar who discusses his approach to growing Binance as a compliant entity in the region — quite relevant given the week’s news.

We also have David Lawant, who is head of research at institutional prime brokerage FalconX. We discuss post-US election market trends and the liquidity surge that he’s seen pour into crypto markets recently.

🎧 You can find Brazil Crypto Report content wherever you listen to podcasts: Spotify | Apple Podcasts | Amazon | Anchor | YouTube

• Bitget CEO Gracy Chen spoke to Valor about the exchange’s strategy for 2025, specifically greater use of its own BGB token, greater proximity to VIP and institutional investors, and aggressively listing new tokens.

• Bitcoin was the strongest performing asset in the Brazilian market for the year 2024, posting a real return of 163%. Gold posted a return of 23% for the year, according to the Studio Group’s Real Gain Index. More conservative investments like Selic and CDI gained 5.74%, while others like Ibovespa and IFIX posted negative returns when adjusted for inflation (-8.55% and -8.02%, respectively). (Portal do Bitcoin)

• Mercado Bitcoin executives argued that 2024 was a milestone year for bitcoin adoption in Brazil. Institutional investors accounted for 70% of MB’s trading volume for the year, taking advantage of a new platform aimed at professional asset managers. Guilherme Pimentel, product director at MB, told Neofeed:

“There are few [clients], but very large ones…We are expanding our services to managers interested in allocating part of their assets to crypto.”

• It is expected that increasing institutional adoption in North America will force the hand of professional allocators in Brazil who have been lagging behind. Joao Piccioni of Empiricus told CoinTelegraph Brasil:

“The manager who says he doesn’t buy crypto because he doesn’t know about it is one step behind. The reputational risk of missing the rally by not being allocated to this market is compromising, especially in the Brazilian scenario.”

• Brazil’s proposed ban on stablecoin transfers to self-custodied wallets will be difficult to enforce and will prompt a larger movement to decentralization, experts told CoinTelegraph Brasil. Carol Souza of Area Bitcoin noted that the Central Bank cannot prevent individuals from transacting in a peer-to-peer fashion using their own wallets or by creating new forms of stablecoins:

“If this is the direction of the Central Bank in the public consultation, it is likely to be regulated as proposed. Another demonstration of how governments use bans to ensure that demand for their melting fiat currencies does not diminish.”

• Hashdex co-founder Bruno Caratori gave some exciting 2025 predictions to Blockworks. He reckons that stablecoins will be used for “everyday transactions” in the United States if a potential Circle IPO materializes. He also says that we might finally see the crypto end of the boom and bust cycle once a 2025 bull run subsides.

• Savvy Brazilian traders were able to take advantage of a glitch in Google’s USD to BRL price feed, which showed the dollar at an erroneous all-time high of $6.70 on December 25. (Livecoins)

• Bitso reported a 54% increase in its Brazilian customer base and 44% growth in transaction volume for 2024. (CriptoFacil)

• Liqi launched 4 new RWA tokens that will pay out up to 177% returns. (CoinTelegraph Brasil)

• Banco Bradesco is launching a pilot project for using stablecoins for settling international transactions, in conjunction with Circle’s USDC stablecoin and Parfin’s infrastructure. The importer first pays Parfin with stablecoins, which are converted to dollars and then passed to Bradesco, which converts to reals and delivers them to the Brazilian exporter. Robert Medeiros, Bradesco’s director of international and foreign exchange, said:

“The big gain we imagine with the stablecoin is operational. It brings greater efficiency and we expect a better cost for everyone.” (CriptoFacil) (Valor)

• Brazilian blockchain expert and personality Courtnay Guimaraes has joined Banco Bradesco as Head of Digital Assets, according to a Linkedin post

• Outgoing Central Bank president Roberto Campos Neto argued that tokenization of the financial system will lead to a future in which monetization of personal data will generate income

“Ultimately, we could tokenize this data and exchange it for resources, as if people’s lifelong savings were made not only with money, but also with the data it produces.” (CoinTelegraph Brasil) (CriptoFacil)

• Chiliz’s Brazil country manager Bruno Pessoa argues that fan tokens will be a critical tool for football clubs to engage their global fan bases in 2025. (Exame)

• Recipients of social programs like Bolsa Familia that use the Single Registry (known as CadUnico) will be able to receive payments by Pix in 2025 with a limit of R$1,860. (CoinTelegraph Brasil)

• The Central Bank will expand its tracking of fraudulent Pix transfers via an improved Special Return Mechanism, which is scheduled to be unveiled in early 2026. Ricardo Mourao, Head of Department of Competition and Financial Market Structure, said:

“This way, it will be possible to block and return funds from the various accounts used in the fraud, further increasing security and trust in Pix.” (CoinTelegraph Brasil)

• Brazil assumes the president of the BRICS bloc for 2025 and will focus on climate change and artificial intelligence regulation. (CoinTelegraph Brasil)

• Financial influencer Nathalie Arcuri of Me Poupe! is recommending that her followers invest a small portion of their portfolio (no more than 10%) in crypto for 2025. She recommends exposure to bitcoin, Ethereum, Chainlink, AAVE and Render. (Livecoins)

• Blockchain experts at several Brazilian banks weighed in on the outlook for the Drex project in 2025. (Exame)

• XDC Network launched its C9Chain in Brazil in partnership with C9 Tech. This will serve as an official subnet on the XDC Network and allow the creation of personalized, private blockchain networks, and it is aimed at applications involving CBDCs such as Drex. (CoinTelegraph Brasil)

• Brazil is Latin America’s leading crypto market, argues CoinEx Latam director Pedro Gutierrez. (Exame)

• Brazil’s Federal Council of Real Estate Brokers approved a proposal to regulate tokenized real estate and contracts on blockchain. (CoinTelegraph Brasil) (Livecoins)

• The Receita Federal, Brazil’s tax authority, will start receiving data on transactions made between users and cryptocurrency exchanges via Pix. (CoinTelegraph Brasil)

• ABcripto and the National Council of the Public Prosecutor’s Office (CNMP in Portuguese) signed an agreement to improve the way seized cryptocurrencies are sold. (Livecoins)

• A Brazilian hacker was indicted in the US for trying to extort R$17 million (US$3 million) of bitcoin out a company in exchange for keeping stolen data confidential. (Portal do Bitcoin)

• ABCripto announced the launch of its Virtual Assets Specialist Certification, which is designed to qualify professionals looking to enter Brazil’s crypto market. (BeinCrypto)

• A Brazilian citizen was detained in Paraguay during a law enforcement operation that seized 670 bitcoin mining machines. (Livecoins)