The new set of rules released by the Brazilian regulators seems to have gone well will the financial services industry in the South American country as the largest financial service provider has jumped into the crypto race. According to the recent reports, Grupo XP, the owner of XP Investimentos SA, is launching an exchange for Bitcoin and Ethereum trading in the coming months, Chief Executive Officer Guilherme Benchimol said at an event in Sao Paulo.
XP Investimentos SA, entry into the crypto space a good sign for the future
XP Investimentos S.A. is a holding company, which through its subsidiaries, offers securities brokerage, investment advisory, and insurance brokerage services. It also owns and operates an institute that offers courses and lectures on investment in Brazil. The financial services firm managing over $35 billion for over 500,000 clients. An entry of a firm as big as XP Investimentos is expected to take cryptocurrencies to the company. The company is still to give out exact details of when will it be officially launching its crypto services. According to the news available, the exchange, which will be set apart from XP’s other brokerage businesses, is going to be run by Thiago Maffra. It will be called XDEX and have around 40 employees.
CEO of XP Investimentos SA Guilherme Benchimol was quoted saying,
I must confess, this is a theme I’d rather didn’t exist, but it does,” “We felt obligated to start advancing in this market.”
XP as part of its future plans is aiming to have 1 trillion reals ($245 billion) under custody by 2020, four times what it expects to have by year-end. The brokerage is also launching a bank in the next few months, Benchimol said. With such a huge target set, the company would definitely want cryptos incrementally contribute to company’s targets.
XP Investimentos has seemingly been researching the crypto space for a while, as back in October 2017 it was revealed it registered the “XP Bitcoin” brand. At the time, a local news outlet queried the company, which then revealed it was studying cryptocurrency markets. One month later, the investment giant hired Fernando Ulrich, a Brazilian cryptocurrency expert.
In April 2018, According to the country’s Department of Federal Revenue, XP Investimentos had registered XDEX INTERMEDIACAO LTDA, whose registered capital is of about $7.3 million.
Cryptocurrencies in Brazil is on a positive growth trajectory
Brazil, a country that boasts the largest economy in South America, is becoming increasingly interested in cryptocurrencies and associated blockchain technology, with the public, the government, and the education system all hopping on the bandwagon.
In 2016, Brazilians moved $160 million in and out of Bitcoin. Last year, 2017, that number was up to around $2.4 billion. In relation, a year ago Foxbit had roughly 100,000 registered users. Today, the cryptocurrency exchange has more than 400,000 — out of an estimated 1.4 million that have opened accounts with them and their three main competitors over the past two years. Compare that to the roughly 600,000 who have stock brokerage accounts, it’s easy to see that Brazilians have been turning to cryptocurrencies in droves.
As for governmental progress, Brazil’s Securities and Exchange Commission (CVM) has a working group that’s discussing regulations for investing in crypto assets. Cryptocurrency experts in the country suspect that they will follow Japan’s lead at best, and, at worst, the lead of the U.S.
If things go as planned, this move towards crypto will inject new life into Brazil’s (currently) small startup market, where there are about 150 new companies building blockchain platforms for education and fintech projects.
XP Investimentos SA entry into the cryptocurrency scene and changing regulatory scenario in Brazil seems to be a positive indication and such moves may make Brazil the frontrunner in the cryptocurrency race from South America
Will Brazil see more players follow the XP Investimentos SA route to cryptocurrencies? Do let us know your views on the same.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.