We launched the first edition of the Valor Crypto Summit last June in Rio de Janeiro. Portfolio founders, regulators, government authorities, entrepreneurs, executives, institutional investors, and artists came from all over Latin America to discuss the latest in crypto during two days of packed content, networking and experiences.
From the Summit, it was clear that Crypto adoption has reached escape velocity and Brazil is and will continue to be a leader in the global crypto ecosystem based on the large and fertile market, progressive Central Bank, and talent in the country.
Below we share some of the major insights we got from the conference.
Central Banks and their role in fostering innovation
Brazil is currently one of the most exciting and disruptive countries when talking about Financial Markets, Pix, Open Finance and Blockchain innovations.
In a conversation with Ambassador Cliff Sobel, Founding Partner at Valor, Roberto Campos discussed how the Central Bank could be a facilitator of innovation, and what are its roles and responsibilities in fostering crypto in the financial sector. “We are moving onto a tokenized economy. We are tokenizing virtual reality, things, and money. A remarkable feature of this moment is the speed of technological transformation. Banks will be able to monetize the deposits by issuing stablecoins. We need to provide the right incentives for banks and the system will self-adjust”, claimed Campos.
CVM’s – Brazilian Securities and Exchange Commission – President Marcelo Barbosa also joined a panel to discuss the importance of a balanced regulatory framework to enable access to crypto. “When we talk about innovation, the main challenge is finding the right balance in regulation. A market regulator should be able to deeply understand the assets and their purposes”, argued Barbosa. The Central Bank and the CVM interact quite often with each other and, on the crypto side, they have been very proactively discussing a draft to regulate crypto services in Brazil. “It’s a difficult balance to find. On the one hand, the most innovative players require some flexibility and ‘regulatory discounts’ to start and offer their services, but, on the other hand, there are several doubts about the protections to investors,” added Barbosa.
Subsequently, the topic of widespread crypto understanding and adoption took the stage. “It’s tougher to explain cryptocurrencies to the elite, to senior executives than to the middle class”, said Eduardo Paes, Mayor of Rio de Janeiro in a discussion with Francis Suarez, Mayor of Miami and Marcelo Claure, Chairman & CEO of Claure Capital and Former CEO of SoftBank Group International . Both mayors agreed that people nowadays are much more connected and engaged, and that their cities of Rio and Miami are at the forefront of great cultural and technological changes. Paes mentioned an example being implemented in Rio: “These new technologies will allow people to pay their property taxes, for example, and it is clear that most of the population see this movement as positive for the development of all cities”, explained Paes.
Mayor Francis Suarez agrees that the solution could lay in the middle class. “In Miami, the waiter knows more about crypto than I do. In the United States, people are only considered smart enough to lose their own money when they have too much money, so crypto is the option open to them”, elaborated Francis.
Cefi and Defi challenges
Traditional financial services such as payments, lending and borrowing were historically only available via established financial institutes and banks, but this changed with the introduction of blockchain technology. At the beginning of the crypto revolution, the discussion was about whether people and institutions should trade, transact and even borrow or lend digital currencies. But as this market expanded, the discussion shifted to a new set of considerations. Both centralized finance (CeFi) and decentralized finance (Defi) offer blockchain-enabled financial services, but the cardinal question that arises when comparing the two models is around their level of trust and control: Should users rely on centralized entities, or on emerging technology and smart contracts? For instance, do crypto users really need to give their information for KYC (Know Your Customer) or should they still access these services regardless?
To talk about how these two models coexist, and how their differences can and are being bridged through institutional adoption, especially focusing on Latin America, we formed a panel with Luis Silva, founder and CEO, of CloudWalk, a global payments company born with the mission to revolutionize the payment ecosystem, Thomas Bohner, founder and CEO of Credix, a decentralized credit platform, and Ezra Kebrab, founder and CEO of Caliza, a soon-to-launch platform that’s building infrastructure to power stablecoin usage through banking-as-a-service providers.
“To move to bigger investors we need to think more globally and holistically. Defi will become the backbone of the financial industry but the distribution channels will still be centralized, smart contracts by themselves will not solve the problems of the people”, said Thomas. In the same line, Luis pointed out that “Money should move at the speed of light. So why not bring this to financial networks, like Pix, to avoid fraud, money laundry etc? We need more data for that, so the more open our systems are, the faster we will get there”.
DeFi and the Global Consumer Adoption
Decentralization will be the way that we transact, and if it’s not here yet, new users are acquired every day. “At Bitso, we always ask the question: how can you narrow the gap between crypto and traditional finance. How can we coexist? And how could regulators intervene and provide the rails for that to happen? The CBDC, Central Bank Digital Currency, is an example of that”, said Thales Freitas, CEO of Bitso.
It is clear that there are still a great deal of challenges to onboarding large quantities of people in this space: legal, regulatory compliance, user interface, and user experience. A panel was set up to tackle this subject with Jackie Bona, founder and CEO of Valora, a mobile-first crypto wallet native to the Celo Platform that enables its users to send, save, and spend crypto as easily as sending a text, Adam Reeds, Founder and CEO of Ledn, an emergent crypto-banking platform focused on lending and borrowing products for digital assets, and Andy Bromberg, founder and CEO of Eco, which provides a digital global cryptocurrency platform that can be used as a payment tool for daily-use transactions.
Adding a different perspective on adoption, world-renowned artist Vik Muniz elaborated on some of his experiences and his opinion on the intersection between art and technology. “This new technology will improve our relationship with symbols, in the world inside our head, and in the world outside”, expanded Vik.
Crypto Expansion in Latam
Latin America has a higher cryptocurrency adoption than the USA and China, with Latam registering 9% of the world’s transaction activity, approx $352.8B in value. This is a region that adopts crypto by necessity: Inflation, devaluation of local currency, restrictions to get USD, high remittance/transaction fees (remittances in Latam represent 2.4% of GDP according to World Bank report 2020- in Venezuela it represents 35%) all incentivize the population to look for innovation to protect their assets.
Moreover, we held discussions on the expansion of Crypto in LatAm, and how this adoption differs in different Latam countries by use cases, and finally how this is driving innovation and thus allocated capital. We were lucky to host two great guest speakers, who by the nature of their business models bring a valuable view on how these components mentioned coexist: Borja Steward, CBO Lemon Cash, crypto challenger that represented over 35% of the downloads of crypto-related apps in Argentina in the last year, and Stanis Bassols from Mastercard, who played a key role in the company’s digital transformation journey.
Within the discussions, interesting facts about the way in which countries in Latam differ regarding crypto use arose. For instance, although Brazil is 3x larger in crypto value than Venezuela, the latter has a higher value in P2P transactions. Venezuelan people use crypto basically for remittances and savings while Brazilian holders normally use them for speculation and wealth growth. And when looking into Crypto service types, the share of transaction volume coming from Exchanges vs Defi Platforms is higher in Venezuela, while in Brazil people are increasingly adopting more complex services.
Valor Crypto Summit Going Forward
Valor is extremely proud of the learnings and experiences that were created and shared by the speakers and attendees during the weekend. This Crypto Summit will be marked as a momentous event both for the firm and the Latam crypto ecosystem as a whole. Keeping true to our ambassadorship and crossborder DNA, we were able to bring together public and private sectors, Brazil, Latam, and the rest of the world together for valuable and insightful conversations..
We would like to once again thank all speakers and attendees for participating in the event and this year’s sponsors: Mastercard, Itaú, Genesis, Gunderson Dettmer and Globo Ventures. This would not have been possible without you.
See you next year in Rio!