Brazil’s Receita Federal — the Special Department of Federal Revenue — has recently reported a substantial increase in the usage of stablecoins, specifically Tether’s USDT.

According to the regulator’s report, the volume of USDT exceeded the combined trading volume of all other cryptocurrencies in 2022.

Stablecoins make up roughly 10% of the global trading volume of the crypto industry and are generally trusted more as a safe haven when volatility peaks in the crypto market.

Over the years since their inception, stablecoins have become a staple holding for anyone involved in digital assets as they bridge the gap between fiat currencies and crypto.

Stablecoins also offer a level of predictability that has made them increasingly popular for various financial transactions.

USDT vs Crypto

In Brazil, Receita Federal data indicates that the most frequently traded stablecoins are USDT (Tether) and USDC, both of which are pegged to the U.S. dollar, along with BRZ, which is linked to the Brazilian real.

Since 2019, the Receita Federal has been conducting monthly assessments to keep track of the growth in stablecoin usage.

Based on the regulator’s research, stablecoins have surpassed Bitcoin in transaction volume.

Based on partial data for 2023, 80% of reported cryptocurrency transactions are related to USDT, making it the most traded digital asset in the country over the last 10 months.

Bitcoin lagging

According to the regulator, USDT began overtaking Bitcoin trading volume in 2022 after the high-profile collapse of Terra LUNA caused investors to flee into assets that were immune to the extreme volatility, such as stablecoins. USDT has become

USDT’s trading volumes in Brazil exceeded 271 billion Brazilian reais (roughly $54 billion) during the observed period — nearly twice the volume of the flagship crypto Bitcoin (BTC), which traded at a little over 151 billion reais (roughly $30 billion) during the same timeframe.

Comparatively, the global 24-hour trading volumes for USDT and Bitcoin stood at $14.58 billion and $14.01 billion, respectively.

While USDT has a higher volume on average, the lead has never been larger than roughly 50%, and it has never surpassed the combined trading volume of all digital assets.

Regulatory concerns

The Receita Federal said it has been closely monitoring the significant growth of USDT usage as it could have substantial implications for the country’s tax and regulatory landscape for digital assets.

An analysis of public data reveals a notable shift in the profile of cryptocurrency transactions in recent years. The dominance of Bitcoin and other cryptocurrencies has been eclipsed by the growing popularity of stablecoins like Tether.

According to the regulator, this shift warrants the government’s attention and could potentially lead to additional legislation for the digital asset industry.