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Brazil Becomes the First Latin American Country to Get Its First Bitcoin ETF

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The Brazil Securities and Exchange Commission (CVM) has approved the first Bitcoin exchange-traded fund (ETF) in the Latin American region.

This follows after QR Capital cryptocurrency investment company’s application for a Bitcoin exchange-traded fund has been accepted in Brazil, which is the largest economy in Latin America. The investment fund will trade under the QBTC11 ticker on Brazil’s main stock exchange B3.

QR Capital describes itself as the largest crypto asset manager in Latin America. The QR team believes that the launch of the first Bitcoin ETF in Latin America is important as it would enable locals to have easier and more direct exposure to the primary cryptocurrency without worrying about managing and storing the assets. Such listing of the Bitcoin ETF on the traditional market stock exchange rather than cryptocurrency exchanges would simplify the process of investing in Bitcoin. For example, listing Bitcoin alongside other stocks such as Facebook stocks, Apple stocks, and many more would provide local investors with the opportunity to mitigate risks and diversify their portfolios.

QR Capital crypto firm said on Friday yesterday that the Bitcoin ETF would follow the performance of the BTC futures contracts traded and operated by the Chicago Mercantile Exchange (CME). The company said: “The QBTC11 will have as reference the CME Group index of bitcoin futures contracts.”

Bitcoin ETFs gain traction

QR Capital’s Bitcoin investment fund is the fourth approval of a Bitcoin ETF in the Western Hemisphere, following three funds of a similar nature recently launched in Canada’s Toronto Stock Exchange (TSX) in February and March. The Ontario Securities Commission (OSC) approved the first-ever Bitcoin ETF (the Purpose Bitcoin ETF) from Purpose Investments Inc. in February this year and a few days later approved the second-ever ETF from Evolve Funds. In March, Canada’s securities regulator approved the third one, CI Galaxy Bitcoin ETF, which started trading on the Toronto stock exchange during that month.

The decision by Canada’s regulators to approve Bitcoin ETFs could represent a tipping point for US money managers to approve their own Bitcoin funds through a regulatory process.

QR Capital has stated that the approval of the QBTC11 could speed up the approval of a Bitcoin ETF in the US because the Brazil Securities and Exchange Commission (CVM) and the US Securities and Exchange Commission (SEC) are affiliated members of the International Organization of Securities Commissions.

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Argentina Considers Launching First Crypto Futures-Backed ETF In Latin America

Matba Rofex, the largest futures and options exchange in Argentina, seeks to be the first Latin American exchange to launch a regulated Bitcoin future exchange-traded fund (ETF).

According to Bloomberg media on Monday, November 1, Matba Rofex is seeking approval from the National Securities Commission of Argentine to launch a cash-settled Bitcoin future backed with ETF.

As per Bloomberg, Matba Rofex disclosed last week that it filed a proposal to Argentina’s securities regulator to launch Bitcoin futures in Argentina pesos.

The talks, which started a few months ago, are in progress, but the regulator has not yet determined the matter.

Ismael Caram, the deputy general manager of financial markets at Matba Rofex, talked about the development and said:

“We want to attract those clients from the regulated market that cannot operate on unregulated exchanges. We perceive an incipient but continuous demand from clients, who want to add exposure in crypto assets.”

Meanwhile, a spokeswoman, who is familiar with the matter at the National Securities Commission of Argentine, said that the regulator is considering the proposal, but it is not a priority request, and further stated that the proposal will also need to be evaluated by the Ministry of Economy of Argentina and the country’s Central Bank.

Matba Rofex plans to operate the new Bitcoin futures ETF with a cash settlement on electronic platforms, just like other financial derivatives.

The Bitcoin futures will require higher guarantees and lower open positions than others because they are considered to be riskier than standard derivatives. The proposal states that investors are expected to deposit a guarantee of about 30% to 40% of the value of the contract.

The underlying assets for the new futures will be the Bitcoin price index. Launched in April, the index publishes the asset’s price in real-time in Argentine pesos, based on 12 different local cryptocurrency exchanges.

Caram revealed that Matba Rofex is also considering working on futures of other cryptocurrencies like Ethereum, or new instruments like crypto exchange-traded funds.

If the regulator awards approval, then Matba Rofex will be the first exchange to launch regulated Bitcoin futures in Argentina. However, citizens are already accessing similar products via unregulated exchanges.

Crypto Booming in Argentina

Considering the government’s positive stance towards cryptocurrencies in Argentina, Matba Rofex might get the approval it requires.

Cryptocurrencies are not prohibited in the country and therefore are legal. However, the government issued regulations concerning cryptocurrencies related to taxation and the prevention of financial terrorism and money laundering.

In August, Argentina’s president, Alberto Fernandez, stated in an interview that he is open to the adoption of cryptocurrencies as legal tender. He further stated there are big discussions around the use and value of crypto assets not only in Argentina but also all over the world. However, he acknowledged that matters should be treated carefully and admitted that he had limited knowledge in the subject of crypto assets.

According to Chainalysis blockchain data analytics firm, Argentina is one of the nine nations with the highest adoption of crypto assets. About 60% of Argentina’s citizens invest in cryptocurrencies to protect their savings against inflation running about 50% annually and recurring currency crises facing the country.

Argentinian Seek Shelter in Crypto, while Local Inflation Surges over 50%

Annual inflation rates have been going through the roof in Argentina by surging more than 50%. Argentinians, therefore, have resorted to transacting in cryptocurrencies to tame runaway prices.

Lemon Cash, a crypto exchange, is aiding in these efforts by offering Bitcoin reward cards that were first rolled out in November, according to Bloomberg.

Franco Bianchi, the chief marketing officer at Lemon Cash, stated:

“Latin America is a good place for these services. Several of the countries have unstable economies and devalued currencies, and the people seek access to cryptocurrencies as a refuge.”

The demand for the Visa cards, which convert the stipulated cryptocurrency to pesos when making payments, is so high that Lemon Cash intends to increase issuance to three million this year.

Initially, the crypto exchange had rolled out 100,000 cards, with each purchase guaranteeing the cardholder a 2% cashback in Bitcoin.

The report noted:

“While the cards have been seen as a marketing tool elsewhere, they’re being used in the nation to help temper the impact of surging prices. Argentines fear and seek cover against an accelerating inflation rate that is already the fourth highest in the world, after Venezuela, Lebanon and Zimbabwe.”

The inflation rate on Argentinian soil does not seem to be slowing down because economists speculate it will hit 55% this year from the present 50.7%.

The issuance of crypto cards is in high gear in the region, with Ripio, a digital wallet provider, having at least three million users, mainly in Brazil and Argentina.

Therefore, crypto usage is speculated to continue rising in Argentina because cryptocurrency is deemed a hedge against a cyclical economic crisis that includes hyperinflation, recession, and repeated currency devaluations.

Meanwhile, Bitcoin miners in Argentina are thriving because of ultra-low utility rates and a surge in capital controls.

Brazilian Senate Committee on Economic Affairs Approves Crypto Regulation Bill

Crypto regulation on Brazilian soil gained steam after the senate’s economic affairs committee approved a bill, highlighting the ground rules and day-to-day usage of digital currency funds.

The committee passage is crucial in the legislative process because the bill awaits a vote on the Senate floor. If it sees the light of day, the final stages will entail approval by the lower house and signing into law by President Jair Bolsonaro.

Per the announcement:

“Under the proposal, the federal government decides which body will be responsible for regulating business with cryptocurrencies.”

Senator Iraja Abreu, the bill’s rapporteur, noted that the mandate of regulating cryptocurrencies would be undertaken by the nation’s central bank, which played a critical role in creating the draft.

If the bill is passed into law, Brazil will emerge as the largest Latin American country to set the crypto regulation ball rolling needed to shield investors from risks and avert money laundering practices.

Per the report:

“Virtual asset service providers must prevent money laundering and concealment of assets, while combating criminal organizations, the financing of terrorism and the proliferation of weapons of mass destruction.”

If these rules are violated, the bill guarantees fines and imprisonment.

Nations across the globe are gearing up to the crypto space, with El Salvador already having set foot in the Bitcoin sector by making the leading cryptocurrency legal tender in September last year. Some of the benefits prompted by this move entail El Salvador’s tourism sector surging by 30% as more foreign visitors continue flocking the nation.

On the other hand, Ukraine recently legalized Bitcoin, and this move was seen as a stepping stone towards opening the nation’s doors to crypto companies.

Huobi Global Acquires Bitex To Expand Latin America in Market Share

Huobi Global announced on Thursday that it has acquired Bitex, one of the first regional crypto exchanges in Latin America, as part of its efforts to expand its presence in the rapidly growing region.

The financial transactions of the deal were undisclosed in this acquisition.

While Bitex was established in 2014, the exchange has built an extensive network in Uruguay, Chile, Argentina, and Paraguay.

According to Huobi Global, the integration of Bitex’s exchange operations into Huobi Global’s platform would enable users in Latin America to trade all digital assets available on Huobi Global. However, Bitex will retain its branding and continue operating its business independently run by its current management.

Jeffrey Ma, Global Head of M&A at Huobi Group, talked about the development and said: “Since Huobi Group first entered the Latin American market, we have seen remarkable growth there and are bullish on our prospects for the region. We are pleased to partner with an established player like Bitex, as we look to grow our footprint in Latin America. Our partnership will enable more users to trade with Huobi’s proven security, liquidity, and stability.”

Bitex CEO Francisco Buero, also commented: “We believe our partnership with Huobi Global will not only support our expansion but also help us better serve our customers, enabling them to access a broader range of digital assets on Huobi Global’s platform”.

Huobi Group made its first entry in Latin America when it launched its subsidiary business in Argentina in 2019 as it was attracted by the rising demand for crypto products and services in the market.

In 2020, Huobi Argentina started enabling local users to access trading pairs between cryptocurrencies (Bitcoin BTC and Tether USDT) and fiat currencies (the Argentine Peso). Last year, it introduced five payment methods to increase the liquidity of its market and improve users’ trading experience.

Crypto Supporting Financial Inclusion

Latin America is dominating the adoption in its use of cryptos. While almost half of the people in the region lack a bank account, most of the unbanked have access to smartphones. That is why, despite concerns over crypto volatility and lack of government backing, many users in the region believe that cryptocurrencies present a long-awaited path to eventually bring the general public into banking.

Since El Salvador adopted Bitcoin as a legal tender in September last year, crypto awareness in Latin American nations has continued to grow. Politicians in Argentina, Brazil, Panama, Paraguay, Venezuela, Chile, and Colombia have become more open to cryptocurrencies because of El Salvador’s influence and as a potential solution to address inflation.

Over 50% Consumers in Latin America Conduct Crypto Transactions, Survey Suggests

Attributed to convenience and flexibility, crypto adoption in Latin America is increasing, according to a study by payments giant Mastercard.

The survey dubbed Mastercard’s New Payments Index 2022 highlighted:

“51% of consumers in the region have already made a transaction with crypto assets, and more than a third say they have made a payment for an everyday purchase with stablecoin.”

Crypto optimism levels among Latino consumers are high because 54% are positive about digital assets being investment vehicles.

Mastercard’s New Payments Index study is conducted annually and scrutinizes consumer behaviour regarding emerging payment methods. This year’s survey was undertaken between March and April and interviewed more than 35,000 respondents across the globe.

Therefore, Latin Americans see cutting-edge technologies like crypto as an ideal payment option. Walter Pimenta, the Executive Vice President, Products and Engineering, Mastercard Latin America and the Caribbean, acknowledged:

“The future of payments is already here. Increasingly Latin Americans are turning to technology to conduct their financial transactions. This trend is expected to rise, with an overwhelming 95% planning to use a digital payment method in the coming year and 29% acknowledging having used less cash in the past year.”

Latin American consumers are also inclined towards open banking and fintech based on the convenience of managing their personal finances. Per the study:

“Nearly 50% of Latin American consumers already use digital channels for financial activities, and 78% of them are interested in flexible payment solutions that allow them, for example, to change the payment date of their bills, especially those with irregular incomes and millennials.”

Therefore, the crypto trend has been gaining steam in Latin America. For instance, 26% of Brazilians had invested in crypto in 6 months to tackle challenges like high inflation rates, according to a study by crypto exchange KuCoin.

Honduras Establishes Bitcoin Valley in Santa Lucia to Boost Crypto Opportunities

Honduras has entered the cryptocurrency trend after launching “Bitcoin Valley” in Santa Lucia meant to spur more opportunities in the digital asset space, according to Reuters.

As a result, the tourist town of Santa Lucia has shifted to a Bitcoin city because business owners are adopting crypto payments to boost tourism.

Cesar Andino, the manager of Los Robles shopping square, pointed out:

“It will open more opportunities and attract more people who want to use this currency.”

Santa Lucia is strategically located because it is just 20 minutes from the nation’s capital Tegucugalpa.

The “Bitcoin Valley” project was jointly developed by Santa Lucia’s municipality, the Technological University of Honduras, the Guatemalan cryptocurrency exchange consortium Coincaex, and the Blockchain Honduras organization.

Therefore, the initiative will initially target 60 businesses to be trained about cryptocurrencies and how to use them as marketing tools for their services and products. The project is expected to be rolled out to more enterprises in Santa Lucia and nearby areas.

Ruben Carbajal Velazquez, a professor at the Technological University, welcomed the “Bitcoin Valley” concept and said:

“Santa Lucia’s community will be educated to use and manage cryptocurrencies, implementing them in different businesses in the region and generating crypto-tourism.”

Since El Salvador accepted Bitcoin as legal tender in September last year, crypto interest in Latin America has soared.

For instance, a recent study by Mastercard disclosed that more than 50% of consumers in Latin America were participating in crypto transactions. The payments giant pointed out:

“51% of consumers in the region have already made a transaction with crypto assets, and more than a third say they have made a payment for an everyday purchase with stablecoin.”

Therefore, Latin Americans see cutting-edge technologies like crypto as an ideal payment option.

Bitso Rolls Out Crypto QR Payment Tool in Argentina

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Bitso, Latin America’s leading crypto exchange, announced on Thursday that it is preparing to roll out a new QR code payment tool in its wallet app that will enable users in Argentina to pay with cryptocurrency at retail shops.

The new payment method is expected to give consumers an alternative to using the Argentine peso and will be beneficial in curbing the country’s inflation.

Beginning on September 27, members of the Bitso exchange in Argentina (estimated to be more than a million users in the country) will gradually be given access to the QR code option.

In a country where inflation is approaching 80% compared to last year, and the purchasing value of the peso is falling, the QR codes will give Argentina consumers another way to save money in crypto and spend it in actual stores.

Bitso’s Senior Vice President of Product Santiago Alvarado commented: “The idea is to make crypto more useful in more places and allow all citizens to live their lives in crypto by buying everyday services.”

The Bitso wallet software will be able to scan the QR codes in many stores in Argentina and give customers the choice of purchasing using Bitcoin, Ether, the Dai stablecoin, U.S.-dollar pegged stablecoins or Argentine Pesos. At the time of purchase, Bitso will automatically convert the merchant’s crypto into Argentine pesos.

Bitso’s wallet will be able to scan QR codes from “all other systems approved by the central bank,” Alvarado said.

Why the QR code surge in LATAM

QR codes are a popular payment method in Argentina – a nation that has the highest rate of QR code usage in Latin America, according to data from the Mastercard New Payments Index.

In a historically cash-based economy where a big chunk of the population remains unbanked (over 40% of Argentina residents are unbanked and in other related countries, including Colombia, Mexico, and Peru), digital payments are surging at a high rate in Latin America. QR code payments have surged in popularity, whose widespread use was significantly triggered by the covid-19 pandemic.

QR, which stands for “quick response”, — and codes can be encrypted with payment information to facilitate contactless digital purchasing. QR codes allow consumers to make payments simply by scanning the code with their smartphone camera, which then withdraws funds from their digital wallet.

Companies facilitating QR code payments in Latin America are emerging all across the region. In Argentina, companies such as Mercado Pago, TodoPago, ValePEI, Ualá, PIM, and Rapipago allow users to pay via QR codes from their digital wallets or accounts.

The Argentina Central Bank recently spurred the bandwagon, allowing several digital payment provider companies to offer QR code payments. This marks a huge step towards transforming the payment methods of a society that traditionally depends on cash.

Tether's Bitcoin Mining Site in Latin America Plans to Start Operations in a Few Weeks

In response to growing speculation surrounding a recently posted photo, Paolo Ardoino, CTO of Tether and Bitfinex, took to Twitter to clarify matters. The image in question showcased a container bearing the “Tether Energy” logo, leading to a myriad of questions and theories. Some tabloids questioned the site’s authenticity, while others speculated if Ardoino had digitally superimposed the logo onto the container.

Ardoino confirmed the photo’s authenticity, revealing it as a depiction of one of the control rooms at a site nearing its completion phase in Latin America. The exact location remains undisclosed to safeguard personnel from potential harassment, especially given the heightened scrutiny Tether often finds itself under.

Tether Energy (TE) represents a new venture by Tether, aiming to establish global partnerships with local entities. The primary objective of these collaborations is to provide capital, infrastructure support, development, and expertise, all in a bid to set up renewable energy production and Bitcoin mining sites. Ardoino stressed the significance of decentralizing Bitcoin mining geographically to counteract the current concentration in specific regions.

Addressing the logo’s placement on the container, Ardoino explained that the team had anticipated the photo’s widespread media coverage and wanted to brand it for that purpose. However, he also noted that using oversized Tether logos could potentially compromise the site’s physical privacy.

Ardoino’s tweet further highlighted the site’s ongoing progress, with the team gearing up to kickstart operations in the upcoming weeks. He also shared a 3D design of the mining site, offering followers an insight into its projected appearance in the near future.

Crypto Adoption in Latin America: A Tool Against Economic Woes and Authoritarianism

Latin America is carving a unique narrative in the global cryptocurrency landscape, with Venezuela and Argentina standing out due to their distinct socio-economic and political contexts. According to a report by Chainalysis, Latin America ranks seventh in the global crypto economy hierarchy, just ahead of Sub-Saharan Africa. The region’s preference for centralized exchanges (CEXs) over decentralized exchanges (DEXs) is notable, contrasting with global trends. However, the core attraction lies in how cryptocurrency is morphing into a tool against economic adversities in Argentina and a shield against authoritarianism in Venezuela.

Argentina: Crypto as Economic Safeguard

Argentina’s long-standing economic turmoil, accentuated by a 51.6% devaluation of the Argentine peso up till July 2023, has spurred crypto adoption as a defensive mechanism. In this period, the nation led Latin America in raw transaction volume, with an estimated $85.4 billion in value received, showcasing a strong grassroots adoption. Alfonso Martel Seward, Head of Compliance & AML at Argentina-based cryptocurrency exchange Lemon Cash, elucidates that crypto, particularly stablecoins, has become a vital alternative for savings amidst stringent foreign currency acquisition restrictions. This trend is visually evident in the spike of crypto purchasing as the peso devalued, especially around mid-April when Argentina’s inflation rate hit 100% for the first time in three decades.

Lemon Cash has capitalized on this situation, offering a debit card feature enabling users to transact with crypto at local retailers, thus alleviating day-to-day commerce challenges induced by currency instability. The rise of Lemon Cash, amid an active crypto market where about 5 million out of 45.8 million people use crypto, epitomizes the asset class’s capacity to buffer against economic hardships.

Venezuela: Crypto as a Pillar of Resistance

Venezuela’s narrative diverges from Argentina primarily due to its authoritarian governance under Nicolás Maduro. The nation’s economic woes, marked by hyperinflation rates surpassing 1 million percent, have driven many towards crypto, especially stablecoins, to preserve their savings. The crypto adoption trend in Venezuela also extends to enabling remittances, which have burgeoned due to a significant populace exodus since 2014.

A notable dimension is how crypto is fostering resistance against authoritarianism. Venezuelan opposition leader Leopoldo López shared an instance where crypto facilitated direct aid to healthcare workers during the Covid-19 crisis in 2020, bypassing the repressive governmental controls. This initiative, which benefited 65,000 medical professionals directly and impacted hundreds of thousands indirectly, underscores crypto’s potential as a humanitarian aid conduit amidst political repression.

Furthermore, López emphasized that cryptocurrency’s value in supporting democracy movements could be fully realized when the off-ramping process is independent of autocratic regimes, indicating a path towards leveraging crypto for broader societal change.