The Collapse of FTX planted a seed of doubt
Brazil response to the recent collapse of FTX is that the tragedy has clearly shaken investor confidence in the digital currency . However, it is important to remember that FTX is just one player in a much larger market. Cryptocurrencies are increasingly being used for international trade, and this trend is unlikely to be impacted by the failure of a single exchange.
In fact, many experts believe that the use of cryptocurrencies will only continue to grow in the coming years. Thanks to their decentralized nature, cryptocurrencies are well-suited for cross-border transactions. They can be quickly and easily transferred between buyers and sellers without the need for a third party. Moreover, they are less susceptible to fraudulent activity than traditional forms of payment. For these reasons, it is clear that the collapse of FTX will not have a significant impact on the wider use of cryptocurrencies.
The of the FTX cryptocurrency exchange has dealt a blow to the perception of cryptocurrencies in Brazil. Thiago César, the Chief Executive Officer of Transfero Group, commented on the unexpected collapse of FTX and said that, like in most other nations, the loss of the platform has harmed sense of trust in centralized cryptocurrency exchanges and cryptocurrencies in general.
However, Mr. César also noted that regular people will still utilize cryptocurrency for international transactions, regardless of the perceived risks associated with centralized exchanges. In other words, while the collapse of FTX may have negative implications for institutional investors and those holding large amounts of cryptocurrency, it is unlikely to have a significant impact on the average person’s use of cryptocurrency.
Brazil’s BRZ was affect by the collapse directly and indirectly
The recent crisis is unlikely to have a significant impact on individuals who use cryptocurrencies for foreign payments or the internationalization of money. A significant percentage of the cryptocurrency trade in Brazil is attributable to Brazilians attempting to convert their national currency into a dollar-denominated financial instrument with international recognition. In this aspect, the market will not decelerate since cryptocurrency is only a platform that facilitates such transactions.
According to a poll conducted by Chainalysis and published in October, the two primary reasons encouraging the growth of cryptocurrencies in Latin America are the battle against inflation and remittance payments. Local exchanges would likely exploit the Futures exchange disaster to promote legislation aimed at bringing overseas exchanges into compliance.
Brazil’s stablecoin BRZ was traded on the now-defunct exchange Futures. As a result, Transfero Group, which issued the stablecoin, is closely connected to the Brazilian crypto ecosystem and FTX, the latter of which provided the former with a fiat on-and-off-ramp. Thiago mentioned that Futures’ downfall has eliminated a major liquidity source from the market, adding that concerns about centralized cryptocurrency exchanges led to a huge outflow of money from Brazilian exchanges, with many considering self-custody. He estimates that at least 20% of trade volume has been lost on exchanges thus far.
They were also affected indirectly as they claim that cryptocurrency investments have always been a tough sell for everyone including Brazilian traders and investors, but the recent FTX scandal has made it even more difficult. Most people are now seeking to unload their cryptocurrency holdings and just keep their money in the bank.
For the investor and trader in cryptocurrencies now, sales are increasingly more difficult. People in Brazil, especially, have always been quite dubious about cryptocurrencies, thus it can be difficult to persuade someone who is not familiar with them to invest. Now, it’s even more difficult, Thiago remarked.
Cryptocurrency’s future is uncertain, but executives are optimistic
While the long-term prospects for the cryptocurrency market remain strong, the short-term outlook is bleak. Many novice investors will likely be turned off by the recent events and avoid the market altogether. Only time will tell if this is a temporary setback or a permanent shift.
It is estimated that there are approximately 3 million people in Brazil who have invested in cryptocurrencies. However, due to the lack of regulations, many people are weary of investing in digital assets. Recently, some cryptocurrency exchanges have pushed for legislation in Brazil to separate domestic and foreign exchanges by denying foreign exchanges accessibility to their global financial records.
While this may seem like a good idea, it could actually be detrimental to foreign exchanges. Cesar argued that such legislation would be detrimental to foreign exchanges, whose key selling point is the availability of liquid, multinational global books.
It is important to note that crypto regulations in Brazil had been sort of inactive throughout the election time but they now need priority, according to Roberto Dagnoni, the executive chairman and CEO of Mercado Bitcoin. Thus, it will be interesting to see how this issue plays out in the near future.