The Brazilian tax department report has revealed that Tether (USDT) has experienced a significant surge in trading volume in the country since the beginning of 2021. In fact, Tether has surpassed Bitcoin (BTC) in terms of trading volume during this period, making it the most traded digital asset in Brazil in 2023.
According to data from Brazil’s revenue service agency, a staggering 80% of cryptocurrency transactions in the country are related to USDT. The report states, “Considering only partial data from 2023, 80% of the reported cryptocurrency movement is related to USDT.” This makes Tether stand out among other stablecoins, and its trading volume has even exceeded the combined volume of all other cryptocurrencies traded last year.
“Stablecoins could potentially replace official currencies and significantly impact countries’ monetary policies,” warns the International Monetary Fund (IMF). This statement aligns with the trend witnessed in Brazil, particularly in developing economies. The prevalence of stablecoins like USDT in the country’s cryptocurrency market has raised concerns about its potential influence on monetary policies.
The Receita Federal do Brasil, the Brazilian tax authority, has been closely monitoring the growth of stablecoins using advanced techniques such as artificial intelligence (AI) and network analysis. The report mentions that the department has recently enhanced its tools to better represent the relationships between cryptocurrency operators.
The Impact of Inflation and Economic Factors
Amidst high inflation and the steady devaluation of the Brazilian real, citizens have significantly increased their trading volume of stablecoins since 2021. In fact, between January and November 2021 alone, locals traded $11.4 billion in stablecoins, nearly triple the total traded volume in 2020.
One of the primary drivers of this phenomenon is Brazil’s rising inflation. In 2021, the country witnessed an inflation rate of 10.06%, the highest level since 2015. The instability of the Brazilian real has led individuals to seek alternative means to protect their wealth, which they find in stablecoins. Additionally, Brazilians are obligated to pay taxes on financial operations, known as IOF in Portuguese, when acquiring foreign currency. However, this tax does not apply to stablecoins, making them an attractive option for individuals looking to mitigate taxes.
It is interesting to note that the prevalence of USDT in Brazil differs from other Latin American countries, such as Argentina, where Maker’s DAI has gained more attention and usage.
