Brazil’s Grupo XP Gearing for Crypto Exchange Launch

Grupo XP, Brazil's largest independent brokerage, is jumping on the cryptocurrency bandwagon despite a certain reluctance. The company is launching an exchange for Bitcoin (BTC) and Ethereum (ETH) trading in the coming months, Bloomberg reported on Friday, citing Grupo XP CEO Guilherme Benchimol.

The platform will be called XDEX, possibly indicating its decentralized nature, and will be set apart from Grupo XP’s other brokerage operations. Starting with around 40 employees, the new business will be run by Thiago Maffra.

Speaking at an event in Sao Paulo, Benchimol said the decision to venture into the crypto field comes in response to growing investor interest. He noted that around three million Brazilians have exposure to Bitcoin compared to only 600,000 or so who invest in stocks.

Despite the strong demand for crypto services, Benchimol seems a bit reluctant to enter the nascent digital assets market.

“I must confess, this is a theme I’d rather didn’t exist, but it does. We felt obligated to start advancing in this market,” Bloomberg quoted him as saying.

Despite Benchimol’s lack of enthusiasm, the regulatory backdrop in Brazil’s crypto sector is improving. Earlier this year, the country’s Securities and Exchange Commission (CVM) prohibited investment funds from trading in cryptocurrency but subsequently softened its stance to permit indirect ownership. Last week, the CVM released a new set of rules that allows funds to invest directly in crypto assets through the acquisition of “shares of funds, derivatives, and assets traded in third jurisdictions” as long as the regulation in those markets permits it.

The move represented a shift from Brazil’s previous stance on cryptocurrencies. The head of the country’s central bank, Ilan Goldfajn, said last year that Bitcoin was a bubble and likened it to a pyramid scheme.

However, Brazil’s cryptocurrency sector is struggling with an increasingly hostile attitude from banks. The antitrust watchdog, CADE, launched an investigation last week into some of the country’s largest banks on suspicions that they are using their market position to limit cryptocurrency trading to the detriment of brokers and crypto exchanges.