Brazil’s USDT adoption soars in 2023, makes up 80% of all crypto transactions

Stablecoin Tether (USDT) has seen a significant increase in adoption in Brazil, accounting for 80% of all cryptocurrency transactions in the country. according according to data from Brazil's revenue services agency.

As of mid-October, USDT transactions in Brazil this year amounted to $271 billion Brazilian reais (~$55 billion), almost double the volume of Bitcoin (btc) transactions in the country, which were $151 billion reais (~$30 billion). Stablecoins are cryptocurrencies designed to have a stable value, often pegged to the value of fiat currencies such as the US dollar and Brazilian real.

USDT transactions have been rising in Brazil since 2021, but surpassed Bitcoin volume for the first time in July 2022, right at the peak of the cryptocurrency industry storm last year, when cryptocurrency lenders Three Arrows Capital and Voyager Capital collapsed.

The crypto winter chopped up the volume of crypto transactions in the country by almost 25% in 2022, ending at $154.4 billion reais, or ~$31 billion, the government reported.

The Brazilian tax agency tracks citizens' cryptocurrency-related activities using a sophisticated system that relies on artificial intelligence and network analysis. According to a blog post, the system can detect suspicious activities and track the location of people trading cryptocurrencies.

The revenue agency also targets cryptocurrency investments made by citizens of the country abroad. On October 25, the local Congress approved legislation which recognizes cryptocurrencies as “financial assets” for tax purposes on foreign investments. Foreign earnings between 6,000 and 50,000 reais (~$10,000) will be subject to a tax rate of 15% starting in January 2024. Above this threshold, taxes will apply at 22.5%.

Since 2019, crypto exchanges operating in Brazil must disclose all user transactions to the government. Capital gains from cryptocurrency sales excessive 35,000 reais (~7,000) per month are subject to a progressive tax bracket of 15% to 22.50%.

Global crypto exchanges such as Coinbase, Binance, Bitso and Crypto.com operate in the country along with local players such as Mercado Bitcoin and Foxbit.

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