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Brazil’s central bank president Gabriel Galipolo highlighted a significant increase in the use of crypto assets in the country, particularly noting that stablecoins, which are less volatile due to their linkage to real-world assets such as the U.S. dollar, account for about 90% of the cryptocurrency flow. Galipolo’s remarks came during a Bank for International Settlements event held in Mexico City.
Galipolo pointed out that the surge in cryptocurrency usage in Brazil over the last two to three years is largely attributed to people using digital currencies for purchases and shopping, especially from international vendors. This trend presents certain difficulties for authorities in terms of regulation and oversight, as the transactions can be opaque and may pose issues related to taxation and money laundering.
The central bank chief also took the opportunity to clarify that Brazil’s Drex system is not, in essence, a central bank digital currency. Instead, it is an infrastructure designed to enhance credit offerings by utilizing collateralized assets. He explained that this is particularly relevant in Brazil, where the cost of local financing remains high due to the limited use of guarantees.
Galipolo elaborated on the workings of Drex, stating that it will employ distributed ledger technology to process wholesale interbank transactions. Moreover, retail access to the system will be facilitated through tokenized bank deposits. This innovative approach aims to streamline the settlement process within the banking sector.
In his closing remarks, Galipolo emphasized the potential benefits of payment integration for facilitating cross-border transactions throughout the Americas. He suggested that Brazil’s widely used instant payment system, Pix, could play a pivotal role in this integration due to its programmable features, which could allow it to connect with other international instant payment networks.
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