Why this one country alone can send Bitcoin and Ethereum higher

Digital assets have forged a path that can no longer be ignored. They have evolved enough in the last decade or so to the point that countries and cities are beginning to realize that embracing the technology will position them better in the long run.

One country that is all in on crypto is Brazil. Its 215 million citizens now live in one of the most crypto-centric economies in the world.

Crypto has been integrated into various levels of Brazil’s economy. The exchange has six crypto-related exchange-traded funds (ETFs), including a traditional one Bitcoin (BTC 1.45%) ETF and a newer ETF that tracks cryptos such as Ethereum (ETH 3.04%), Uniswap (UNI 3.48%)and Curve (CRV 2.85%) which supports decentralized finance (DeFi) projects.

Big cities like Rio de Janeiro show how local governments can use digital assets and blockchain technology. In late July, Rio’s finance minister said the city wants to add Bitcoin to its treasury portfolio, saying the city hopes to become the “crypto ecosystem of Brazil” and the “innovation and technology capital of the country.”

The embrace at the highest levels of government and finance is also reflected in cryptocurrency ownership among Brazil’s citizens. It is estimated that approximately 16% of people aged 16 to 64 own some form of cryptocurrency. This leads all of Latin America and beats the US, which comes in at around 12%.

The banks are coming

That 16% looks set to continue growing based on recent developments with the country’s banks. In June last year, the country’s largest digital bank, Nu Holdings’ (NOW 4.94%) Nubank, launched its own crypto trading platform, which allows users to trade Bitcoin and Ethereum. In just under a month, the platform has added more than 1 million customers. Nubank also allocates 1% of its cash to Bitcoin to show its faith in the cryptocurrency.

With its recent success, Nubank competitors are entering the crypto game. Banco Santander Central Hispano (SAN 0.41%)Brazil’s fourth largest bank, announced that it will pursue a strategy to offer crypto-related products to its 53 million customers.

In a press release, Santander CEO Mario Leão said the bank is not pursuing crypto products as a reaction to competitors, but because it recognizes that it is a market here to stay. More details about the bank’s crypto products may be released in the quarterly earnings report in October.

The rise of the digital country

The path that Brazil’s municipal governments, financial institutions and citizens are creating can be a model for the rest of the world. Bitcoin in particular appears to be the country’s favorite, but its embrace of all crypto and blockchain-related technology positions it as a leader in the digital economy.

Continued investment in that economy through job creation, more accessible commerce, and a more pro-crypto government will ensure that the adoption of the best digital currencies persists. If other countries and cities follow Brazil, we should expect Bitcoin to spread into all sectors of the economy, increasing its price, a development that will benefit crypto investors.