Cryptocurrency exchanges are expanding at record speed at the moment. Several of the biggest names have been doing a lot of work to capture new regions, and Coinbase has decided to join its fellow bigwigs in the game.
Last week, the company was reported to be on the cusp of a landmark deal that would see it instantly get a foothold in one of the world’s most exciting crypto markets.
One Of Coinbase’s Biggest Buys
Late last month, reports surfaced that Coinbase is in advanced talks over the acquisition of 2TM - the parent company of Mercado Bitcoin. Estadão, the third-largest newspaper in Brazil, was the first to pick up the story, telling its over 200 million readers that a deal between the Silicon Valley exchange and 2TM could be finalized as early as April.
According to the report, Coinbase has been in talks with the executives at 2TM for the vast majority of the year. Valued at $2.2 billion, 2TM is the parent company of Mercado Bitcoin - the largest crypto exchange and brokerage service in Brazil. While Mercado will be the primary asset that Coinbase will be interested in, it is worth noting that 2TM is also the umbrella company for several digital asset companies in the Latin American legion - including Portal do Bitcoin, MB Digital Assets, Blockchain Academy, CriptoLoja, and more.
2TM itself has been doing rather well. The company raised $50 million in its Series B funding round in November, explaining at the time that the funds would go towards expanding its reach. The company was primarily able to hit this valuation thanks to Mercado, which currently serves over 3 million customers and processed more than $7 billion in trades in the first nine months of 2021.
Now that Mercado could be enveloped in the Coinbase family, it is expected that the exchange will grow even more and solidify its footing as Brazil’s most trusted crypto broker.
Entering Into A Growing Crypto Market
For Coinbase, the acquisition of 2TM makes absolute sense. The exchange has been looking to build on its massive reach in North America, adding the Latin American countries to its catalog as well. In its most recent institutional report on Latin America, the exchange notably mentioned Brazil 31 times - more than any other nation.
Coinbase’s report highlighted the rapid increase in direct crypto trading. The exchange even mentioned Mercado, claiming that the latter had seen a 700 percent increase in transaction volumes between August 2020 and August 2021.
The focus on Brazil definitely isn’t a mistake. The country appears to be in the middle of a massive crypto adoption spree, and both the private and public sectors appear to be enamored by the asset. Last month, Chicão Bulhões, the country’s Secretary of Economic Development, Innovation and Simplification, announced that the city of Rio de Janeiro would start accepting Bitcoin as a payment channel for taxes related to urban real estate within their city limits from 2023.
This new feature is set to make Rio the first Brazilian city to accept mainstream Bitcoin payments. A translation of the official statement reads that the city will hire companies to help with the seamless conversion of crypto assets to the Brazilian real. This way, the city is able to ensure conversion and accurate payments optimally.
Pedro Paulo, a city official, added that the city’s goal is to develop a self-sustaining crypto market. He added:
“We will stimulate the circulation of cryptocurrencies by integrating them into the payment of taxes, as in the case of IPTU, and, in the future, this can be expanded to services such as taxi races, for example.”
Brazil is now expected to be a significant hub for crypto activity going forward. And, Coinbase could be moving into the country at the very best time, capitalizing on the growth in the country’s crypto market and ensuring that it gets enough momentum to become a cornerstone for Brazilians looking to get started on their crypto journey.
Coinbase has also been making some strategic acquisitions recently. Last November, the exchange acquired Indian artificial intelligence startup Agara to help improve its customer support capabilities. Coinbase also acquired Bison Trails- a blockchain infrastructure company - last year to help improve its offering of products and services across the board.