The Brazilian Tax Office (RBF) has taken note of the increasing popularity of stablecoins in the country's cryptocurrency market. Stablecoins, such as USDT, USDC, and BRZ, have become the preferred choice for most cryptocurrency transactions in Brazil.
The Brazilian Tax Office recognizes that this trend could have significant implications for the tax and regulatory landscape surrounding cryptocurrencies in the country. Stablecoins are digital assets that are pegged to the value of a fiat currency, such as the Brazilian peso, and are designed to maintain stability in their value.
Among the stablecoins, Tether's USDT stands out as the largest one by market capitalization and also the most traded cryptocurrency in Brazil. USDT has been involved in over 80% of all transactions in the country since 2019, transferring more than 271 billion reais (approximately $54 billion).
The CEO of Tether, Paolo Ardoino, expressed his satisfaction with the growing adoption of USDT in Brazil. He believes that the product's usefulness in solving real-world problems is the driving factor behind its increasing popularity. The convenience and practicality offered by stablecoins are attracting more users as they navigate the cryptocurrency landscape.
It seems that Brazil is experiencing a similar trend to countries like Nigeria, Argentina, and Turkey, where inflation is becoming a concern for citizens. In such cases, Tether (USDT), a universal global currency, often comes to the rescue and sometimes replaces the inflating national currency.
This is evident as wholesale food transactions, as well as large real estate and automobile transactions, are increasingly being serviced using USDT. Despite government and tax authorities worrying about tax collection, citizens are motivated to preserve their savings and income in the face of hidden inflation.
Brazil, in particular, is facing potential changes as the likely next socialist populist president plans to introduce the US dollar as the national currency. Last year, from October to December, the turnover of USDT in the Brazilian economy grew from $877.5 million to $2.381 billion. In 2023, the USDT turnover reached $54 billion.
This shift towards using USDT suggests that many Brazilians are seeking stability and protection for their assets amidst inflation concerns.
It seems that the Central Bank of Brazil has made an announcement regarding the creation of a Central Bank Digital Currency (CBDC) called Drex. This new currency aims to modernize and facilitate electronic transactions in Brazil. With the anticipation of the introduction of the digital real, the turnover of USDT (Tether) in Brazil has significantly increased.
Inflation and an increase in the consumer price index have contributed to this surge in USDT turnover. In just a year and a half, the turnover has increased by 62 times and reached $877.5 million. This success with USDT in Brazil might be an indicator of what could happen in Russia with Tether's digital ruble.
The testing of the digital ruble in Russia is reportedly going according to plan, and the Central Bank of Russia plans to expand the pilot in 2024. By 2025, the mass introduction of the digital ruble is expected. However, the Head of the Bank of Russia, Elvira Nabiullina, may not realize the potential impact of Tether in Russia.
From the indications in Brazil, Tether has the potential to replicate its success in Russia with its digital ruble. It will be interesting to see how the introduction of the digital ruble unfolds and how it may affect the financial landscape in Russia.
The current estimated turnover of USDT (Tether) in the Russian economy is around $4 billion. However, it is possible that this volume is actually much higher. Considering the significant increase in USDT turnover in Brazil (62 times in a year and a half), it is worth wondering how the Central Bank of the Russian Federation would react if USDT experiences a similar growth in Russia.
It seems that the Brazilian President, Lula Da Silva, is quite pleased with the success of USDT in Brazil. This raises the question of whether the Russian government and central bank can effectively handle the potential impact of Tether in their economy.
It will be interesting to observe how the Russian authorities and financial institutions navigate the evolving digital currency landscape and the potential implications it might have for the country's economy.
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