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Brazilian Сrypto Industry: Interest Is Growing, Regulation Is Stagnating

26 April 2019 16:09, UTC
Brazilian Сrypto Industry: Interest Is Growing, Regulation Is Stagnating
By Denis Goncharenko, Pablo Ramalho

Brazil, or the Federative Republic of Brazil, is a Portuguese-speaking state in South America with a population of more than 200 mln people. It’s the fifth largest country in the world and the sixth in terms of population. The Brazilian economy ranks ninth in the world in terms of nominal GDP and seventh in purchasing power parity. The country is a member of the UN, G20, WTO, Mercosur and the Union of South American Nations, as well as one of the BRICS countries.

The Brazilian economy is rather diverse due to the high level of development of the agriculture, mining and manufacturing industries and services. The country produces a variety of products: from automobiles, steel to computers, airplanes and consumer goods. Business structures are actively investing in equipment and technology, most of which is purchased from North American partners. At the same time, corruption, poverty and illiteracy are quite common, and they are the significant barriers to development.

Here are some facts about the Brazilian economy:

  • The country has the most developed industrial sector in Latin America.
  • Approximate percentage of GDP: agriculture — 5.5%; industry —27.5%; services — 67.0%.
  • Most of the country's energy comes from renewable sources. The country is the largest producer of ethanol, sugar cane fuels and by this reason it is sometimes called the ‘bioenergy state’.

Technological development

Computer and information services are currently leading in the export of services in Brazil, as the country is rapidly developing the IT sector and in 2017 it was the fifth largest market for information and communication technologies in the world. More than 1.5 mln people are involved in this area, and there are more than 40 major technology centers in the country.

The situation with the cryptocurrency industry in Brazil

Despite the active development of IT-technologies and investments in this industry, large investors and financial institutions still avoid cryptocurrencies and  prefer not to get involved, says Pablo RAMALHO, a Bitnewstoday correspondent in Brazil. The attitude is even rather negative: for example, banks periodically block the accounts of cryptocurrency companies and their owners.Trials are ongoing with the participation of CADE — the Administrative Council for Economic Defense.

Despite the enthusiasm of investors, regulators are still not active. They were proactive in November 2018 for the last time, submitting a draft bill on taxation of crypto assets. At the moment, there are no specific laws regarding the taxation of cryptocurrencies and digital assets. The only thing that exists is the income tax, and if you earn fiat while trading, you will be taxed, but if you just have cryptocurrency, you don't pay anything on taxes. However, some investors are accountable to the tax service — there is a provision that imposes a 15% tax on income for earnings of more than 35,000 reals per month (approximately 10,000 US dollars).

Despite this atmosphere, cryptocurrency exchanges and exchangers still exist and are active, but not actively enough against the background of more crypto friendly countries. There are crypto exchanging services for the general public and there are a few enthusiasts, but there aren't people using cryptos as a means of payment. Perhaps that is why April was a surprisingly active period for Brazilians, who noted a significant increase in trade in the last month. According to the Cointrader Monitor, on April 10, local crypto exchanges recorded a turnover of more than 100,000 BTC in just 24 hours. Analysts have suggested that the increase in trading volume is apparently associated with a recent increase in the price of Bitcoin, which provoked the interest of the audience.

Conclusion

Attention to cryptocurrency as a reserve means of storing capital is not accidental: a surge in the volume of trading in digital assets may be caused by a fall in economic indicators since last February. With such a dubious "achievement", Brazil may well be considered a contender for primacy in the Bitcoin market in Latin America, by overtaking Argentina. It is possible that the government understands that clarity in the legislation regarding cryptocurrencies and tokensales will significantly improve the investment atmosphere in the country, but today the crypto industry is moved forward by some single enthusiasts, who oppose lots of barriers on their way.

Image courtesy of Coindoo



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