SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

Brazil’s leading cryptocurrency exchange, Mercado Bitcoin raised $200 million from the SoftBank Latin America Fund, Mercado’s parent company 2TM Group announced today. The investment values 2TM Group at $2.1 billion and is SoftBank’s largest capital injection in a Latin America crypto company.

Following closely on the tails of SoftBank’s investment in the $250 million round raised by Mexican cryptocurrency exchange Bitso in May, the deal shows a growing interest in bringing bitcoin and other cryptocurrencies to Latin America.

“This series B round will afford us to continue investing in our infrastructure, enabling us to scale up and meet the soaring demand for the blockchain-based financial market,“ says Roberto Dagnoni, executive chairman and CEO of 2TM Group. “We want to be the main solution provider for corporate players.”

The São Paulo-based exchange aims to increase the number of listed assets (the exchange currently lists approximately 50 tokens) and grow its 500-member team to 700 by year’s end. Further plans involve regional expansion with focuses on Mexico, Argentina, Chile and Colombia and growth acceleration across 2TM Group’s portfolio, which also include digital wallet provider MeuBank and digital custodian Bitrust (both are subject to regulatory approval).

Founded by brothers Gustavo and Mauricio Chamati in 2013, Mercado Bitcoin has become the largest cryptocurrency exchange in the country. In January, it scored its first financing round co-led by G2D/GP Investments and Parallax Ventures with participation from an array of other investors.

Like many of its counterparts, Mercado Bitcoin has seen significant growth over the past year, with its client base reaching 2.8 million in 2021 – more than 70% of the total number of individual investors on Brazil’s stock exchange B3. Approximately 700,000 clients signed up just between January and May.

Over the same period, trade volume on the exchange had increased to $5 billion, surpassing the total for its first seven years combined. “Every single month [of this year], we are trading the full volume of 2020,” says Dagnoni.

“Mercado Bitcoin is a regional leader in the crypto space and the leading crypto exchange in Brazil. They are tapping into a huge local and regional addressable market measured by potential use cases for crypto,” says Paulo Passoni, managing partner at SoftBank’s SBLA Advisers Corp. (which manages the SoftBank Latin America Fund).

“At SoftBank we look to invest in entrepreneurs who are challenging the status quo through tech-focused or tech-enabled business models that are disrupting an industry – Mercado Bitcoin is doing just that.”

Despite the rapid growth of the local crypto market, Brazilian regulators have been lagging behind. In 2018, Brazilian antitrust watchdog, the Administrative Council for Economic Defense (CADE), opened an investigation into the country’s largest banks for allegedly abusing their power by closing accounts of crypto brokerages. The probe was ongoing as of last year.

In April 2020, Senator Soraya Thronicke proposed an extended set of rules for Brazil’s “virtual asset” businesses, custodians and issuers, consumer protection, crypto taxation and criminal enforcement, however no apparent action has been taken on the bill so far. Nonetheless, Dagnoni says the nation’s regulatory environment is favorable, and the company is closely working with regulators “to build a consistent framework for alternative digital investments in Brazil, in line with its vision of a convergence of the traditional and blockchain-based financial markets.”

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I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.

Source: SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

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SoftBank Group Corp. is a Japanese multinational conglomerate holding company headquartered in Minato, Tokyo. The Group primarily invests in companies operating in the technology, energy, and financial sectors. It also runs the Vision Fund, the world’s largest technology-focused venture capital fund, with over $100 billion in capital, backed by sovereign wealth funds from countries in the Middle East.

The company is known for the leadership by its founder and largest shareholder Masayoshi Son. It operates in broadband, fixed-line telecommunications, e-commerce, information technology, finance, media and marketing, and other areas.

SoftBank was ranked in the Forbes Global 2000 list as the 36th largest public company in the world, and the second largest publicly traded company in Japan after Toyota.

The logo of SoftBank is based on the flag of the Kaientai, a naval trading company that was founded in 1865, near the end of the Tokugawa shogunate, by Sakamoto Ryōma.

Although SoftBank does not affiliate itself to any traditional keiretsu, it has close ties with Mizuho Financial Group, its main lender.

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