Accepting cryptocurrencies even if the Brazilian government does not accept them

Welcome to Latam Insights Encore. A deep dive into Latin America’s most relevant economic and crypto news from the past week. In this issue, we examine the incredible growth of cryptocurrencies in Brazil and how their adoption is outpacing the government.

Latin America Insights Encore: Brazil’s crypto adoption leaves government behind

Brazil, one of Latin America’s largest economies, illustrates the wide gap between bottom-up cryptocurrency adoption and top-down approaches to industry regulation.

A new report from Chainalysis, a leading blockchain insights company, finds that Brazil has experienced a sharp increase in crypto trading volumes, making it the de facto crypto hub of Latin America. According to the company, the Brazilian economy traded $318.8 billion in crypto assets from July 2024 to June 2025, marking a milestone for the country’s digital asset economy.

And this not only beats previous numbers, it’s more than double the previous mark, showing strong movement into these assets from both institutional and retail users.

These numbers lag behind other large crypto economies in the region, such as Argentina and Mexico, and come after Brazilian authorities took unpopular measures targeting crypto users.

The latest relates to interim measures enacted by President Lula that end the tax exemption for virtual currencies and establish a flat tax on holdings of virtual currencies, including self-custodial assets.

I have already mentioned the possible consequences of these measures, anticipating an exodus to unregulated platforms and decentralized protocols to circumvent these government efforts.

Nevertheless, what is more relevant is that the current situation signals a divorce between ordinary Brazilians who want to use cryptocurrencies and the Brazilian authorities who have instead put up barriers to prevent this.

The Brazilian government should take this into account and change its tune to be more tolerant of technologies that already have a foothold on Brazilian soil. Otherwise, given the nature of cryptocurrencies, there is a risk that their rules and regulations will become irrelevant.