With their latest move, emerging economies such as Brazil and India are getting closer to crypto. While Brazil legalized cryptocurrency as a payment method, India is launching the retail version of its digital currency on a test basis.
- Brazil legalized cryptocurrencies as a means of payment.
- India’s central bank is testing its digital currency in different cities.
- Digital currencies could be potential drivers of financial stability in emerging economies.
Crypto Becomes Legal In Brazil
The Chamber of Deputies of Brazil, a federal legislative body, legalized cryptocurrencies as a means of payment throughout the country, boosting the adoption of digital currencies and the expansion of the ecosystem.
This bill does not make any cryptocurrencies legal tender in the country. However, the bill will include digital currencies and air mileage programs in the definition of payment methods that are supervised by the central bank.
Currently, Brazil already has the most cryptocurrency ETFs in Latin America. In most banks and brokers in the country, cryptocurrency investments and similar services such as custody and token offerings are available.
India Tests Digital Rupee
The central bank of India will start testing its retail central bank digital currency (CBDC), the digital rupee, in four cities, including Mumbai, New Delhi, Bengaluru, and Bhubaneswar. According to the Reserve Bank of India, four banks will participate in the initial digital currency pilot, with four more sets to join later. Digital currency would be issued “in the same denominations that paper currency and coins are currently issued.''
In addition to trust, safety, and final settlement, the e-rupee would carry the same attributes of physical cash, the central bank said, adding that it wouldn't earn interest and could be converted to other forms of money, including bank deposits. E-rupees will be distributed via mobile wallets by banks. Transactions between individuals and payments to merchants are both possible. According to the central bank, scanning a QR code would be required for the latter.
The Bottom Line
With cryptocurrencies gaining traction in emerging economies, lawmakers continue to closely monitor the industry for the potential need for additional regulation. The latest moves illustrate the crypto winter and the collapse of FTX in 2022 have not stopped emerging economies from integrating crypto into the mainstream.