Welcome to Latam Insights, a compilation of the most relevant crypto news from Latin America over the past week. In this week’s edition, the Central Bank of Brazil temporary ditches blockchain from its CBDC project, Latam stock markets outperform U.S. counterparts, and Brazil aims to tighten crypto compliance rules.
Latam Insights Encore: Brazil CBDC Ditches Blockchain, Latam Stocks Shine Bright
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Central Bank of Brazil Clarifies Drex CBDC Project’s Future: Digital Real Still the ‘Ultimate Goal’
The Central Bank of Brazil has clarified the current state of drex, its multi-year-long central bank digital currency ( CBDC) project, after having terminated the decentralized platform that served as a base for the first two phases of the pilot.
According to statements issued to local media, the reason for this would be that the third phase of the pilot would ditch blockchain to center on allowing tokenized assets to be registered as collateral for other transactions.
“Phase 3 of the drex pilot project will begin next year with a focus on using assets as collateral for credit operations,” the bank stated.
Nonetheless, the institution reinforced that this abandonment would only be temporary and that the establishment of a comprehensive platform that allows for the use of smart contracts in an interoperable and programmable way continues to be key for drex’s future.
Latam Stocks Outperform S&P 500: Analyst Claims Region Is ‘Open for Business’
Even with the good results of the stock market, which is currently up 15% year-to-date (YTD), emerging market alternatives in Latam have managed to surpass this rise.
Otavio Costa, a macro strategist at Crescat Capital, called this growth into attention, reporting that the iShares Latin America 40 ETF, which tracks the value of the 40 largest companies in Latam, was up over 45% YTD.
These numbers surpass SPX figures comfortably, and for Costa, mark a transformation in Latam markets as the region experiences a “profound structural transformation.”
Costa stated:
Latin America is open for business, and the US administration increasingly recognizes the region’s importance in supplying the natural resources critical to current technological advancements and reshoring efforts.
Brazil to Tighten Crypto Rules, Attacking the ‘Financial Arm’ of Organized Crime
The Brazilian government is organizing an overhaul of the compliance system to control the use of crypto by criminal organizations for illicit purposes.
The push is part of a new strategy of Fernando Haddad, Minister of Finance, that is targeting the financial arm of organized crime besides traditional measures including territory controls.
CNN Brazil reported that a new regulatory standard to solve this usage of crypto by criminal organizations will be published soon. Haddad stated that the CVM would strive for “more transparency about the individuals behind these assets and clearer rules for tax treatment.”
FAQ
- What recent decision did the Central Bank of Brazil make regarding its CBDC, drex?
The Central Bank announced it will temporarily drop blockchain for the drex project, focusing instead on using tokenized assets as collateral for transactions. - How are Latin American stocks performing compared to U.S. markets?
Latin American stocks, particularly the iShares Latin America 40 ETF, are up over 45% YTD, significantly outperforming the U.S. stock market, which is up 15% YTD. - What measures is Brazil taking to enhance crypto compliance?
The Brazilian government is implementing stricter compliance rules to combat the use of cryptocurrencies by organized crime, aiming for more transparency and clearer tax regulations.
