Brazil’s Special Department of Federal Revenue, Receita Federal, has reported a bloom in stablecoin usage, particularly Tether-issued USDT.
According to the report, USDT trading volume surpassed all cryptocurrencies combined recorded in 2022. This report reflects the increased adoption of stablecoins as a means of payment by Brazilians amid rising inflation.
USDT Dominates Other Cryptocurrencies In Trading Volume
Notably, Stablecoins account for about 10% of the global cryptocurrency trading volume. Most people regard the class of digital assets as a haven during increased market volatility. This may be due to their fiat currency peg that makes them relatively stable than conventional crypto assets.
Moreover, since inception, due to their unique role as a bridge between fiat currencies and cryptocurrencies, they form a large percentage of many crypto investors’ holdings. Unlike conventional cryptocurrencies, stablecoins have a higher level of predictability, making them suitable for diverse financial transactions.
Since 2019, Brazil’s Receita Federal has been garnering data through monthly assessments to monitor the growth of stablecoins in the country. Data from the regulator shows that US Dollar-pegged stablecoins like USDC and USDT, alongside Brazilian real-pegged BRZ, are the most traded stablecoins in Brazil.
USDT Trading Volume Vs Bitcoin
Further, according to the watchdog’s research, stablecoins exceeded Bitcoin in trading volume. Data from 2023 research shows that USDT accounts for 80% of recorded crypto transactions. This makes stablecoin the most traded digital currency in Brazil over the past 10 months.
Meanwhile, Recieta Federa noted that USDT started outpacing Bitcoin trading in 2022 following the catastrophic crash of the Terra ecosystem. This collapse caused many investors to resort to digital assets, like stablecoins, with higher resilience against extreme price volatility. Among these assets, USDT became the traders’ top choice.
For clarity, the trading volume of USDT in Brazil was over 271 billion Brazilian reals (~$54 billion) during the regulator’s research period. This figure is double the trading volume of Bitcoin, which was a little above 151 billion reals (approx.$30 billion) during the same period.
Similarly, the global 24-hour trading volume, which stood at $14.58 billion, surpassed that of Bitcoin at $14.01 billion.
Although, on average, USDT recorded a higher trading volume, it has never led the global market volume by more than 50%. Also, it has never exceeded the trading volume of all crypto assets combined.
Stablecoin Usage Growth Raises Regulatory Concerns In Brazil
While the growth of stablecoins in Brazil bodes well for the crypto industry, it poses significant regulatory concerns. The explosive increase in stablecoin trading volume will likely increase regulatory probes on the crypto industry in Brazil.
More so, the Receita Federal revealed that it has been monitoring USDT usage growth as it poses significant implications for tax.
Data reveals that the outline of crypto transactions has changed in recent years, with the growth of stablecoins like USDT obscuring Bitcoin and other cryptocurrencies’ dominance. The Receita Federal said the shift could lead to increased regulation of crypto assets.
In late September, following a surge of crypto imports in Brazil, the Central Bank of Brazil’s governor, Roberto Campos Neto, linked digital assets payments to tax evasions and illicit activities. The financial regulator revealed they will tighten regulation on crypto.
Featured image from Pixabay and chart from TradingView.com
Source: https://bitcoinist.com/usdt-surpass-trading-volume-of-combined-cryptos/