Rio To Allocate 1% Of Treasury Reserves To Crypto

After several days of steep declines, finally some good news for cryptocurrencies.

According to a report in Globo, the mayor of Rio de Janeiro, Eduardo Paes, said Thursday he plans to allocate 1% of Brazil’s second-most populous city’s treasury reserves to cryptocurrencies, as part of his plan to turn the city into a cryptocurrency hub.

“We are going to launch Crypto Rio and invest 1% of the treasury in cryptocurrency. The government has a role to play,” Paes reportedly said, adding that the state is also planning to introduce tax exemptions for the industry.

The panel also included major Brazilian officials like city finance secretary Pedro Paulo, who noted that the administration is considering a 10% discount on property tax in Brazil on payments with Bitcoin. “Let’s study the legal framework to do this,” he said

“You take the single quota discount of 7%, it would make 10% if you pay in bitcoin,” Paulo said

Miami Mayor Francis Suarez also spoke at the event, and discussed the challenges in transforming cities into technological hubs. In February, Saurez announced plans to place a portion of Miami’s treasury in bitcoin.

According to CoinTelegraph, the news comes as the Brazilian government increasingly warms its stance on Bitcoin and the cryptocurrency industry, with federal deputy Luizão Goulart proposing a bill to legalize crypto as a payment method for public and private sector workers in November. In December, MercadoPago, a major crypto payment firm in Brazil, enabled Brazilian residents to buy, sell and hold major cryptocurrencies like BTC and Ether.

The surprising announcement comes after a strong endorsement from Fidelity published last week, in which the financial giant said that “history has shown capital flows to where it is treated best and embracing innovation leads to more wealth and prosperity.”

Fidelity also thinks that “there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future.”

Fidelity concludes by noting that it wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.

Whether it is on the back of the Rio news, or because the crypto market is turning and is now expecting far less tightening from the Fed in light of the slowing of the US economy, cryptos have moved higher after hitting fresh session lows just before the US trading open.