90% of Brazil’s Crypto Flow Is Stablecoins—What’s Driving This Trend?

Brazil’s central bank chief Gabriel Galipolo recently highlighted a significant rise in cryptocurrency adoption across the country. Speaking at a Bank for International Settlements event in Mexico City, Galipolo noted that over the past two to three years, the volume of crypto transactions has surged dramatically.

Interestingly, he estimated that around 90% of this activity is tied to stablecoins—cryptocurrencies designed to maintain a stable value by being pegged to real-world assets such as the U.S. dollar.

Unlike more volatile digital currencies, these stablecoins are increasingly being used for everyday purchases and cross-border shopping, Galipolo explained.

Crypto Stablecoin Flow Surge: There’s A Catch

Although the rise of cryptocurrency transactions in Brazil might seem like a positive news, however, the central bank chief raised concerns about the challenges this rapid adoption presents to regulators.

Galipolo emphasized that the rise in stablecoin usage often involves a degree of opacity, particularly regarding taxation and money laundering. With most transactions tied to retail activity and international purchases, oversight and enforcement are becoming more complex.

Notably, so far, regulators seem to have been facing the difficult task of maintaining financial integrity while supporting innovation and the growing demand for digital payment options.

To address these challenges and improve the nation’s financial infrastructure, Galipolo pointed to Brazil’s Drex initiative. While often referred to as a central bank digital currency, Drex is described as a framework for facilitating credit backed by collateralized assets, according to Galipolo.

Galipolo explained that Drex’s goal is to lower the cost of borrowing and expand the use of secured financing, areas where Brazil has traditionally struggled.

The platform leverages distributed ledger technology to handle wholesale interbank transactions, with retail participants accessing the system through tokenized bank deposits. This approach as revealed, aims to enhance efficiency in the lending market, reduce costs, and increase overall access to credit.

Another Solution Introduced

Additionally, Galipolo emphasized the potential of Pix, Brazil’s popular instant payment system, to extend its influence beyond domestic borders. As one of the world’s most widely adopted real-time payment platforms, Pix has already made some mark in Brazil.

Galipolo suggested that Pix’s programmability and flexibility could allow for integration with international instant payment networks, creating a more seamless cross-border payment experience.

Such integration would further strengthen the region’s financial connectivity and position Brazil as a leader in digital payment infrastructure.

Meanwhile, the Brazil Central Bank proposed plans to ban withdrawals of stablecoins to self custody wallets last year. According to reports, this proposal is still open for public consultation until February 28, 2025.

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