Adoption Picks up Pace in LATM with Brazilian Central Bank’s DeFi Project & Developments in Argentina

Adoption Argentina Brazil CBDC Central Bank DeFi

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 25, 2023

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Crypto adoption is on the march in Brazil, where the nation’s Central Bank has commissioned a commercial banking giant to build a DeFi solution for its prototype central bank digital currency (CBDC). Meanwhile, across the border in Argentina, a city says that it will accept tax payments made using USD-pegged stablecoins – while the capital Buenos Aires also wants to get in on the action.

In an official notice, Brazil’s Central Bank said that it has selected Itaú Unibanco, one of the largest commercial financial institutions in the nation, to work on the creation of a number of stablecoins, including a fiat real-pegged token. This stablecoin will be used in conjunction with other fiat-pegged tokens. These will be pegged to other major global fiats. Although details are so far scant, it appears that the Central Bank wants to look at the way various CBDCs could be used on digital platforms.

The Central bank called the project a “DeFi liquidity pool,” and described it as a “platform that enables custody, currency exchange, and alternative investments via blockchain technology and smart contracts.”

Itaú has been asked to formulate a “use case” that will comprise “creating a liquidity pool, with tokens that emulate stablecoins that [are pegged 1:1] with the real, dollar, and other fiat currencies.”

The Central Bank spoke of the need to create a solution whose “operations” would be “similar to that of liquidity DeFi solutions that currently operate in the [cryptoasset] market.”

The Central Bank has also asked Itaú and a number of other traditional finance and crypto-space players to work on a series of crypto and blockchain-related projects. The projects are the brainchild of the bank’s Laboratory of Financial and Technological Innovations Lab.

The Central Bank asked one firm to work on “a bridge” that would allow its prototype digital real to interoperate with other existing blockchain networks – using the Celo (CELO) blockchain. Another company was asked to create “a solution for tokenizing assets on the blockchain to decentralize credit risks.”

Meanwhile, Ambito reported, along with Infobae, that the Argentinian city of Mendoza has begun accepting tax payments in a number of stablecoins.

The city, famous as a wine-producing hub, announced that it had “incorporated new technology” into its “payment processing platform” that “now allows taxpayers to use cryptocurrencies to pay their taxes.”

However, stablecoins are not considered to be cryptocurrencies, and it appears that the city is not quite ready to take the bitcoin (BTC) plunge – and will only accept payments made in DAI, tether (USDT), USD coin (USDC), and other major USD-pegged coins.

The city appears to have pipped the capital Buenos Aires to the post with its new adoption measure – the media outlets explained that a similar initiative in the capital is nearing completion.

City authorities were quoted as stating that they “are working to make this happen as soon as possible. We are just waiting on [domestic crypto] exchanges to help us implement this measure.”

Diego Fernández, Buenos Aires’ Secretary of Innovation and Digital Transformation, was quoted as stating:

“To talk about crypto is to talk about innovation, freedom, and opportunity. Using technology, new ways of paying and saving have emerged. We want people to be able to pay [their taxes] using the tools they already make use of.”

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