What makes Bitcoin so popular in Latin America? Surprisingly enough, it’s not trust but rather a lack of trust. It turns out people are more willing to get on board with new digital currencies if they lack trust in public institutions. A recent survey by the Center for the Governance of Change shows that most countries with a strong banking system are less prone to crypto adoption while residents of Brazil and other Latin American countries are more likely to buy cryptocurrencies as they have less confidence in their banking institutions.
Bitcoin regulation in Brazil
Cointelegraph Brasil recently reported that cryptocurrency adoption in Latin America has grown, with investors optimistic about the movement of the market in 2020. However, regulation is still up in the air in the region. The Brazilian Central Bank hasn’t yet accepted cryptocurrencies as a legal payment instrument as there is no government mechanism that guarantees their value. On January 12, 2018, the Brazilian Securities and Exchange Commission issued Statement No. 1, expressing concerns about cybersecurity and privacy risks and stating that virtual currencies can’t be classified as financial assets and therefore can’t be acquired by investment funds.
Bitcoin users in Brazil
Meanwhile, reality has left the regulation question in the dust. In 2019, Statista published a study called “How Common is Crypto?” featuring infographics showing that Brazil holds the second-highest percentage-per-population of cryptocurrency users in the world. More consolidated economies come at the end of the list which presumably corresponds with their citizens enjoying greater confidence in fiat money management.
According to the World Bank Organization, about 50% of the Latin American population is unbanked. Unable to open a regular bank account, Brazilians seek out cryptocurrencies. High inflation rates are another reason why people turn to BTC as a means of preserving their financial assets.
Liquidity as a key factor in Latin American market
Statbureau reported that in 2019, Brazil ranked #4 in the world according to yearly inflation rate, coming in at almost 4%. Reuters even reported that “Brazil’s real may be sliding toward an all-time low.” To put two and two together, the key advantage in the Latin American market is liquidity, the ability to buy or sell an asset accommodating to the asset’s price and not changing it. In a liquid market, there are always investors willing to trade. So crypto users buy or sell tokens quickly without cutting the price or waiting too long for the trade to be matched. Top liquid markets maintain high trading activity and the bid and ask prices are not spread too far apart.
Whereas global exchanges liquidity ranking can be found at CoinMarketCap.com, local exchanges’ liquidity can be measured by their 24 trading volume, order book depth and the bid/ask spread (the amount by which ask price exceeds the bid price). We decided to rank local exchanges by their Bitcoin liquidity, as BTC is the most popular coin in Brazil.
Global exchanges operating in Brazil
These high rollers are experienced and reliable. But do they have what it takes to operate against the backdrop of financial instability and accelerating inflation? Some exchanges are killing it, some are lagging behind.
This exchange can be called secure as it has never been hacked. It is the recognized champion in liquidity, which is a strong selling point for Brazil. HitBTC boasts a larger number of trading pairs than most exchanges and it offers multiple services: a trading platform with sleek UI and several professional APIs including the most efficient protocol FIX API. Among the few drawbacks is the difficult crypto-fiat exchange. Also, there are some complaints that HitBTC keeps accounts without 2FA protection disabled, which, nevertheless, has often saved user’s funds from hacker attacks.
The big crypto fish leading in trading volume, Binance recently announced it will soon launch a platform named Latamex that will operate under the Binance Fiat Gateway. It will enable users to buy Bitcoin (BTC), Binance Coin (BNB), Ether (ETH) and Binance’s stablecoin Binance USD (BUSD) for Brazilian reals. As Binance CEO Changpeng Zhao has promised, the platform will “instantly bridge the gap between fiat and crypto” to help Latin American traders.
Founded in 2012, this market player supports fiat trading, deposits and withdrawals. It could be called reliable but for its multiple downsides. The registration process may take up to two months. Besides, after experiencing two major security breaches in 2015 and 2016, Bitfinex lost some users’ faith. But obviously it has survived hacks as well as accusations of market manipulation and insolvency.
Singapore-based Huobi is usually praised for its wide range of cryptos. The financial services group Huobi Global owns brands Huobi Pro and the first autonomous token listing exchange called HADAX (Huobi Autonomous Digital Asset Exchange). The maker/taker fees can be reduced by up to 50% by buying VIP memberships for the exchange, which attracts institutional investors. The additional perk is that the fee discount doesn’t end after a few years like with most exchanges. Though the downside of it is wash trading accusations, Huobi is extensively used in Brazil.
The veteran from California is available worldwide except for Afghanistan, Cuba, Iran, Iraq, Japan, North Korea, Tajikistan and (suddenly) Washington state (WA) and New York (NY). Kraken’s special feature is called “a dark pool”. With its help, traders can buy or sell considerable amounts that are not visible to the rest of the market so the operation doesn’t result in unfavorable price movement. The exchange’s website used to have a problem with platform instability that has been finally solved by revamping.
Brazilian exchanges review
Seizing an opportunity, crypto businesses and exchanges are emerging (but also shutting down) on a daily basis, often at the instance of the Brazilian Administrative Council For Economic Defense (CADE). By various estimates, there are currently from 49 to 55 crypto exchanges operating in Brazil. So before trading, take the time and effort to check out the global market leaders and reliable local players.
This biggest cryptocurrency platform in Brazil deals with digital assets and other alternative investments, including high-return investments from 16% p.a. In addition to cryptocurrencies, Mercado is the only exchange that offers tokens on real assets. Its BTC liquidity is $374,786, which is quite good even compared to global exchanges.
It is probably one of the largest local Bitcoin exchanges but it has its pros and cons. Users get a signup bonus and enjoy fast deposits and withdrawals. However, it’s hard to call a high privacy exchange since identity verification is required. US investors trade at their own risk, handling the problems connected with their residency. In 2017, Foxbit consolidated as leader in BTC negotiation holding 55% of Brazilian market.
These guys can boast more than 10 years of work with fiat – real and USD. Now one can buy and sell BTC and several altcoins using over 30 different fiat currencies to choose from. Those who wish to trade large amounts can use BitBlue’s Trading Desk, receiving personalized service and differentiated quotes. However, BitBlue is unlikely to pass a financial health check as it is threatened to be shut down by the Brandesco bank by February, 26th.
Like most popular Brazil-based exchanges, Braziliex allows users to trade popular blockchain assets and Brazil’s real (BRL). It is famous for its merchant payment service app – Braziliex Pay. The mechanism is simple and convenient for the local market: buyers pay in BTC, and the merchant receives the payment in BRL. Braziliex can’t boast remarkable BTC liquidity – only $169,317.
The first crypto exchange in Brazil, Bitcoin To You, has been operating in the financial market since 2010. This online BTC broker works quickly but isn’t available on weekdays before 8 AM and after 8 PM and on Sundays. Though it is trusted in the country of origin, Bitcoin To You can’t be called private due to the shady registration procedure and can hardly be thoroughly studied as there is very little info and few reviews on the web.
Bottomline
Too tired to go through all the work yourself? We have narrowed it down for you. As one can see, neither global nor local crypto exchanges have only benefits with 0 drawbacks. Yet due to the fact that some services are better-suiting for beginners and have deeper liquidity, we can sum it up simply and eloquently. The top-3 reliable crypto exchanges suitable for inexperienced traders are:
- Binance, the world’s largest online broker that is trusted by many.
- HitBTC, #1 in liquidity, which technically means you are able to enter the market easily and trade on your own terms.
- Mercado Bitcoin, the biggest Brazilian exchange with a fair BTC liquidity.
The best plan to be followed would be to choose from the three depending upon the trading purpose, the current budget and the ability of a targeted crypto asset to be easily converted into cash. Before deciding where to trade, one must conduct thorough research and draw their own conclusions. The text is drawn entirely from the author’s expertise which might differ from another user’s personal experience.
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