Brazil is moving to dollar-backed stablecoins as the country's economy continues to ail coupled with the looming uncertainty on its increasing COVID-19 cases. According to a Binance Brazil Representative, Mayra Siqueira, stablecoin traders have quadrupled since the year began with the USDT and BNB tokens dominating the market.
Similar sentiments were shared by other stakeholders operating in the Brazil crypto market. Notable mentions include Fabio Canesin, the co-founder of Nash Exchange, who said that his DEX recorded around $12 million in USDT volume within the past month. As per Fabio's estimates, close to 8,000 users who facilitated this liquidity were Brazilians.
Instead of a Bitcoin maximalism, Brazil seems to lean more towards dollar-denominated stablecoins as a hedge of their ailing economy. Fabio emphasized that an emerging dollarization trend and access to smart contract infrastructure is further pushing the adoption of stablecoins,
“We have a trend of dollarization…so of course having stablecoin access is interesting for … access to smart contracts for more stable savings.”
Currently, there are over five local stablecoin projects within Brazil, a number that could soon double if the current market trend persists. Libra’s rival, Celo, is looking to initiate a real Brazilian stablecoin following a proposal to its community last month. Fernando Bresslau, a blockchain and Celo advocate in Brazil, confirmed this prospect,
“We’re serious about making something with Celo that makes sense for the local market.”
Other local real stablecoin initiatives include an ERC-20 token by Bolsa Cripto exchange set to launch later in the year. Notably, this crypto exchange supports the dollar-backed PAX stablecoin despite a low activity within its network. The firm's co-founder, John Willock, said that they are looking for more stablecoin options that will make sense to the Brazilian economy,
“Stablecoins, more than anything else, are all about the distribution strategy. … We’ve been looking to other issuers of stablecoins to see how they would like to make these assets more available.”
Willock went on to further note that there will be demand for both dollar-pegged and local stablecoins. Consequently, the market will decide over time which digital assets present more value hence possible mass scale adoption. Nonetheless, Brazil's conservative nature when it comes to their local currency might slow down this process according to Teixeira and Bresslau,
“Even though we have a deep trauma with hyperinflation in Brazil, especially in the 1980s and 1990s, it’s not a part of our culture to have the economy in dollar terms. Unlike Argentina.”