With crypto, Ugandans will move, store cash
When we think of Brazil, names like Neymar Jr, Ronaldinho, Ronaldo (the original) and Pelé crop up like some bumper harvest of inspired thinking.
Indeed, in a football mad world like ours, this is understandable. However, of recent, Brazil is fast becoming known for something else: a vibrant crypto market.
The numbers from the Brazilian tax authority, the Federal Revenue of Brazil (RFB), which is part of Brazil’s Ministry of Finance, indicate that the cryptocurrency market enjoyed an upswing in January.
In that month, crypto trading increased more than 10 percent compared to December of last year.
Tether’s USTD reigns and rules as the currency that moves the most volume in terms of trading related to OTC (over-the-counter) trades, according to market analysts with an eye on Brazil’s economy.
When acquiring foreign currency, Brazilians are forced to pay a tax on financial operations that ranges between 1.1 percent and 6.38 percent. The tax does not apply to stablecoins.
Before we delve deeper into this reality and what it means to Uganda, let us clarify something for the uninitiated.
Tether (USDT) is a stablecoin, a cryptocurrency pegged to and backed by fiat currencies like the US dollar.
It was launched by the company Tether Limited Inc. in 2014. Tether Limited is owned by the Hong Kong-based company iFinex Inc, which also owns the Bitfinex cryptocurrency exchange.
Good, now that we are all caught up, we may continue.
RFB, which receives reports of the movements of cryptocurrency by law for tax collecting purposes, recently released its crypto volume reports.
These reports revealed a fillip in the volume of the cryptocurrency market, with $2.85 billion (Shs10.5 trillion) being transacted in January alone. Clearly, the numbers of companies and individuals purchasing crypto in Brazil, and the world has grown exponentially.
According to coindesk.com, Brazilians have incentives to purchase crypto instead of US dollars to hedge against inflation or devaluation.
As of 2023, it has been estimated that global crypto ownership rates have risen at an average of 4.2 percent, with more than 420 million crypto users worldwide. This jaw dropping figure is bound to continue soaring.
So, one must ask, how can Uganda latch onto this upward trend and also make a proverbial killing?
With $2.3 billion in transactions using the stablecoin Tether (USDT) in Brazil, we have been shown the way forward. So when Uganda’s crypto market finally opens up, Ugandans should use Tether for storing and moving money.
It is, after all, the most widely traded and offers the stability, simplicity and security we all look for in our money transactions. I call it the magical three Ss.
Stability is its core value proposition, but its simplicity is also key as it unlocks the easiest ways digitise the USD.
Again for the uninitiated, the USD Coin (USDC) is a tokenised United States dollar; with the value of one USDC coin pegged 1:1 to the value of one US dollar. The value of USDC is designed to remain stable, making USDC also a stablecoin.
It also provides security, as I mentioned earlier, and can also give you decent returns over a three-to-five-year time horizon if invested.
To some, it is sure to rival investments such as real estate as the preferred choice to preserve one’s passive income.
Mr Orena is the CEO of DM Exchange, a Fintech company.