Brazilian residents have purchased a significant amount of cryptocurrencies even as the country plans to introduce new laws regulating the sector.
According to data provided by Bruno Serra, the country’s central bank, in 2021, residents have purchased $4.27 billion worth of cryptocurrencies. The highest amount was bought in May, accounting for $756 million in the wake of assets like Bitcoin attaining a record price of almost $65,000.
In January, Brazilians purchased $419 million worth of cryptocurrencies, while August recorded $496 million. The least amount of digital currencies was purchased in March at $357 million.
Drivers behind Brazil’s crypto investments
The value of purchased cryptocurrencies highlights the role digital assets play in the country’s economy, especially after the coronavirus pandemic that resulted in the debasement of most national currencies.
Like most South American countries, Brazil’s economy has been hit with a combination of inflation, hyperinflation cycles, and deflation. In this case, cryptocurrencies have emerged as a hedge against such economic turmoil.
The significant number of crypto purchases potentially serves Brazil’s large unbanked population. Notably, relying on cryptocurrencies makes sense for this population as a vehicle for financial inclusion since the sector has no strict entry barriers.
Furthermore, Brazil’s young population might be a force behind the significant purchases. Generally, the younger generation has been known to lead the way in cryptocurrency adoption.
It is worth noting that Brazilian investments correlate with a year that cryptocurrencies have surged in value cumulatively, recording over $2.5 trillion in market capitalization.
Brazil’s crypto regulation progress
The purchases come in the wake of speculation that the country was contemplating declaring Bitcoin a legal tender, following El Salvador’s footsteps.
However, the country’s lawmakers are debating a bill that seeks to regulate the sector, making it easier for residents to purchase and invest in digital assets. Furthermore, the bill tackles the perennial challenges of scammers related to the cryptocurrency sector.
Worth noting is that Brazil is standing out from jurisdictions that have opted for tougher crypto regulations. Crypto proponents believe such positive legislation will likely impact Bitcoin’s price to hit a record level.