Brazil’s fintechs and banks plunge into crypto as demand intensifies.

Key Points:

  • Over 4 million individuals in Brazil are embracing the crypto space
  • Itau, the largest private bank in Brazil, has entered the realm of crypto trading services

Financial technology firms and banks in Brazil are venturing into the crypto business due to the high demand for digital assets in the country. Itau, the largest private bank in Brazil and Latin America, has become the first traditional bank to offer crypto trading services. Neobanks like Nubank and Mercado Pago, owned by online marketplace Mercado Libre, have already entered the brokerage services market over a year ago.

The entry of Itau signals a significant step for traditional banks embracing the crypto landscape. The most profitable product in the crypto market is the purchase and sale of assets, and the commissions obtained from these operations are significant for both individuals and institutional clients. Itau has announced that it will allow its customers to start trading Bitcoin and Ether through its online investment tool, Ion.

Nubank and Mercado Pago have already found success in the crypto space in Brazil. Nubank attracted one million customers to its crypto offerings within just one month of its launch in June 2022. Both fintech giants have also expanded their crypto services by integrating stablecoin USDC into their offerings in select countries.

However, not all crypto endeavors have been successful in Brazil. In the second half of this year, two digital lenders in the country—online broker XP and the PicPay digital wallet—decided to sunset their crypto services in Brazil. The Brazilian crypto market anticipates comprehensive regulations outlining how companies can engage with digital assets, and Itau has stated that it will gradually introduce this new feature for a select group of customers.

In July, the number of individual cryptocurrency investors in Brazil surpassed 4 million, highlighting the potential for banks and fintechs offering services in this segment. However, challenges remain, such as regulatory uncertainty and the need for clear guidelines on how to engage with digital assets.