Blockchain and cryptocurrency initiatives in Brazil are a double-edged sword. While startups and government agencies work to implement blockchain technologies to increase compliance and reduce corruption, Brazil’s 35th President, Lula da Silva, is on his way to prison in part for a Bitcoin-based money-laundering scandal.
Brazil, like the rest of the G20, sees cryptocurrencies as assets rather than legal tender. However, one of São Paulo’s most prestigious universities debuted a Cryptocurrencies Masters’ program this year, so it is unclear where Brazil will land on this contentious debate. What’s more, Brazil’s private and public sectors are rapidly adopting blockchain technology to manage the political and economic challenges of a population of 210 million people.
Here are some of the ways governments and businesses are implementing blockchain and cryptocurrencies in Brazil.
Blockchain and the Brazilian government
The Brazilian government already uses blockchain in a variety of ways for their operations. Two of the most prominent initiatives include a way to regulate land titles in the Amazon as well as a management system for Brazil’s ‘popular petition’ electoral process.
In January 2018, Brazil’s state-run technology company Serpro launched a blockchain platform that regulates land titles in the world’s fifth-largest country. Currently, there is no centralized management of land purchasing in Brazil, leaving in charge over 3,400 private agencies to negotiate land titles across the large nation. Reuters estimates there are over 5 million landless families in Brazil, and in the Para state, there is four times more land registered than land that exists. Serpro is working alongside US startup Ubitquity, a blockchain-backed real estate registration company, to convince Brazilians to adopt a more secure system. While the efforts show promise, Serpro is already receiving strong pushback from the cartorios who currently manage the process.
Brazil’s complex electoral system is also moving over to the Ethereum blockchain to manage its ‘popular petitions,’ a way for citizens to bring causes to the attention of Congress. These petitions must receive 1% of the popular vote before being debated in the government. But as campaigners move across the country, they often lose crucial signatures. Therefore, the government is developing a mobile app to help citizens track and manage these petitions over blockchain.
Blockchain and Brazilian banks
Last year, Brazil’s Central Bank began exploring blockchain options to back the country’s financial infrastructure. They are currently testing four platforms: Ethereum, Quorum, HyperLedger Fabric, and Corda. Their plan is to back-up the central bank’s current real-time gross settlement system (RTGS) to keep up with other central banks that are beginning to innovate using blockchain technology.
The Brazilian National Bank for Economic and Social Development (BNDES) is also looking into the blockchain to record government spending and increase transparency. BNDES is currently tokenizing the Brazilian Real so they can use it in a hyper ledger on the Ethereum blockchain.
Private banks, including Santander, Itau, and Brandesco have begun experimenting with blockchain and cryptocurrencies on their own, with caution. Santander has refused to open accounts for Bitcoin exchange brokers, but it also launched Santander One Pay FX, the first blockchain-based service for end customers in Brazil.
Bradesco is experimenting with a blockchain-based digital wallet with eWally, and Itau recently created a blockchain center of excellence. The Brazilian Banks Federation (FEBRABAN) has also created a working group to study the impact of distributed ledger technologies on the Brazilian banking sector.
Blockchain Startups in Brazil
Despite unclear regulations, Brazilian consumers have quickly adopted cryptocurrencies and blockchain technologies. One of Brazil’s most prominent cryptocurrency brokerage platforms, Foxbit, even had to stop new customer registrations last November because of an overload of demand. Here are some of the popular blockchain startups operating in Brazil today:
Bitcoin to You: A low-cost Bitcoin exchange platform which sets up bitcoin exchange centers across the country.
CoinBR: A cryptocurrency mining and exchange service founded in Chile with operations in Brazil.
With Brazil’s complicated regulatory environment, it may be some time before blockchain is adequately accepted and integrated into the legal, political, and financial management systems in Brazil. However, Brazil’s unclear position on blockchain and cryptocurrencies has not stopped citizens from purchasing coins or using blockchain-based services. As the government and banks continue to experiment with the blockchain, Brazil may become a hotbed for blockchain tech, much like neighboring Argentina.