Brazil Pits Lula's Crypto Crackdown vs. Bolsonaro's Wildcard Stance

Brazil’s Election Will Determine The Crypto Way For The Next Few Years

The Brazilian presidential election, which will happen on October 4, has the possibility of changing the country’s crypto policies depending on who manages to win the election.

The faceoff, which local polls projected will progress into a runoff election as no candidate is expected to reach over 50% of the popular vote, will determine whether President Luiz Inácio Lula da Silva, or his closest rival and son of the former President Jair Bolsonaro, Flavio Bolsonaro, will define the future of cryptocurrency in the country.

If President Lula manages to retain his position, analysts expect crypto regulations to follow suit, with increased compliance and requirements imposed on crypto users and institutions, which has already moved the local crypto market into a consolidation phase. Under Lula’s tenure, the Central Bank has issued a series of resolutions strengthening the oversight of crypto exchanges, with law enforcement agencies attacking the use of crypto assets by criminal gangs and local cartels swiftly.

Furthermore, with the victory, Lula would receive the support needed to push a plan to tax stablecoin transactions, a measure reportedly abandoned due to its divisiveness as Lula and his party switched into election mode.

In opposition, it is unclear which direction Bolsonaro’s crypto policies would take, as there are no records of him referring to cryptocurrency. Nonetheless, reports indicate that Bolsonaro acted in defense of former partners of Glaidson Acácio dos Santos, the “Bitcoin Pharaoh,” who masterminded a crypto investment pyramid scheme that moved $7 billion and affected over 100K customers.

Bolsonaro asked for the dismissal of criminal charges against two former associates of the Bitcoin Pharaoh, a petition that was ultimately denied by a Superior Court of Justice minister.

While traditional polls give an equal chance of winning to both candidates, with some favoring Lula, prediction markets tell another story. Having favored President Lula for quite some time, Polymarket gives Bolsonaro a 59% chance of winning the election, while Lula trails in second place with 41% in a prediction market with over $163 million in volume.

The central bank of Brazil banned prediction markets under Resolution No. 5,298, issued on April 24, considering them illegal after the Secretariat of Prizes and Betting (SPA) stressed that event market platforms “simply reproduce the essential elements of fixed quota bets.”