As Taxes Fade Away, Stablecoin Adoption Continues to Rise in Brazil
Key Takeaways:
Russo highlighted that most international travel agencies in Brazil now leverage stablecoins. Also, the executive mentioned foreign settlements with Bolivia as another use case for stablecoins. “There are no dollars in Bolivia. Stablecoins have become the solution,” he stressed.
Stablecoins, which have reached trading volumes of over 29.4 billion reais (nearly $6 billion) during December, have an advantage over standard fiat transactions. While the latter have to pay a financial transaction tax, stablecoins can be transacted freely.
While the Brazilian government was prepared to tax stablecoin transactions, the move faced strong backlash from cryptocurrency industry groups, who even vowed to sue the government. The measure would encompass a 3.5% levy on all stablecoin movements, including exemptions for users who don’t move over 10,000 Brazilian reais (nearly $1,910) monthly.
As the initiative also faced rejection from some lawmakers, reports indicate that President Luiz Inácio Lula da Silva deferred this discussion to a hypothetical upcoming fourth term, as his party switched into election mode.
While Lula was leading the polls earlier this year, he is facing a slump in polls as Brazil starts feeling the heat of inflation and higher prices after the escalation of the Middle East conflict. Prediction markets anticipate a toss-up between him and Flavio Bolsonaro, son of former President Jair Bolsonaro, for the October elections.
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