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Brazil’s Special Department of Federal Revenue, Receita Federal, has reported a surge in the usage of stablecoins, particularly Tether-issued USDT, in the country. The trading volume of USDT has surpassed that of all other cryptocurrencies combined, indicating the growing adoption of stablecoins as a means of payment by Brazilians amidst rising inflation. Stablecoins, which account for about 10% of the global cryptocurrency trading volume, are considered a safe haven during market volatility due to their fiat currency peg. They also offer predictability and are suitable for various financial transactions. USDT, along with other stablecoins like USDC and BRZ, are the most traded stablecoins in Brazil. In terms of trading volume, stablecoins have even exceeded Bitcoin, with USDT accounting for 80% of recorded crypto transactions in Brazil over the past 10 months. This shift towards stablecoins can be attributed to the catastrophic crash of the Terra ecosystem in 2022, which led investors to seek more resilient digital assets. Despite its high trading volume, USDT has never surpassed the combined trading volume of all crypto assets or led the global market volume by more than 50%. The rapid growth of stablecoin usage in Brazil raises regulatory concerns, particularly in terms of tax implications. The Receita Federal has been closely monitoring the usage of USDT and warns that the increased adoption of stablecoins could lead to increased regulation of the crypto industry. The Central Bank of Brazil’s governor has already linked digital asset payments to tax evasion and illicit activities, indicating a tightening of regulations in the future.