The collapse of the FTX crypto empire may have damaged the sentiment of Brazilian retailers and institutions towards crypto. However, its impact will not affect ordinary citizens – who will still use crypto for cross-border transactions.
Reflecting on the recent fall of FTX, Thiago César, the CEO of on-ramp fiat provider Transfero Group, said the fall of the exchange, like in many countries around the world, has damaged trust around centralized crypto exchanges. and crypto in general.
The Transfero Group is closely tied to the Brazilian crypto ecosystem and FTX, as it was the on-ramp and out-ramp fiat provider for the exchange and is also the issuer of the Brazilian stablecoin BRZ, which was listed on the exchange. exchange now gone.
Caesar told Cointelegraph that the stock market crash removed a “great source of liquidity” from the market, with FTX ranked in the top three by trading volume.
He also noted that the uncertainty surrounding centralized crypto exchanges has caused a “big outflow” from exchanges in Brazil, with many considering self-custody – estimating that at least 20% of trading volume has been lost on exchanges so far.
“A lot of people even try to liquidate their positions in crypto and we just hold money in the bank account.”
Caesar noted that the FTX saga will make crypto investing a “harder sell” for new investors and traders.
“For the crypto investor/trader of course. It’s a harder sell now. If you’re talking to someone who isn’t crypto savvy and trying to convince them to invest, especially in Brazil , people have always been very skeptical of crypto. Now it’s harder,” he said.
However, he notes that for people who use crypto as a means of cross-border payment or “internationalization of money,” the collapse of FTX is unlikely to have an impact.
“Much of the crypto volume in Brazil comes from players who want to exchange their local currency for an international dollar-denominated liquid asset. So in that sense, the market will not shut down because crypto is just rails for that.
In October, a Chainalysis report revealed that installments and fighting inflation were two of the biggest drivers of crypto adoption in Latin America.
Caesar said FTX’s collapse will likely be used by local exchanges “as a lobbying tool” to push for regulations to bring international exchanges into line.
Cesar added that these crypto exchanges have been pushing for regulation in Brazil that would “separate” local and international exchanges by removing international exchanges’ access to their global liquidity books.
“They were proposing that the regulations would require, for example, that liquidity on Brazilian reais books be separated from international books.”
Caesar explained that such regulation would hurt international trade because their main benefit comes from liquid and international global books.
In a November 18 report Roberto Dagnoni, executive chairman and CEO of Mercado Bitcoin, said Brazil’s crypto laws were “sort of dormant” during the election period, but must now take priority.
“The rules that currently exist are not applicable to certain players, so they can do whatever you want,” he said.