Bitcoin may see a major boost in demand following Brazil’s Central Bank blocking payments from the WhatsApp messenger app in the country.
Brazil is the app’s second-largest market, leaving a massive hole that could soon be filled by cryptocurrencies.
Central Bank Of Brazil Suspends Facebook’s WhatsApp Payment Feature
In a move to “preserve an adequate competitive environment,” the Central Bank of Brazil has suspended the payment feature on WhatsApp in the country.
WhatsApp is a popular chat application offered by Facebook, Inc. with built-in payment functionality. This functionality is now hindered in the country due to an abrupt decision made by the Central Bank.
As part of the move, authorities asked Mastercard and Visa to immediately cease approving transactions made through the application.
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Facebook’s rollout of WhatsApp in Brazil has barely lasted a month before the banking authority pulled the plug.
The sudden surprising suspension will allow the Central Bank to consider any risk to the country’s own payment system.
The Central Bank claims the “irreparable damage” could be done to the existing system” if WhatsApp is allowed to proceed without regulatory approval first.
The Central Bank says its especially concerned with “competition, efficiency and data privacy.”
Brazil appears keen to prevent Facebook Inc. from stealing the thunder of its own PIX payments system. The country says it will be rolled out by November 2020.
Brazilian Citizens To Turn Toward Bitcoin and Other Cryptocurrencies
Due to the sheer size of the population and the lack of access to traditional banking infrastructure, Brazil was already WhatsApp’s second-largest market. Over 120 million users from the region are using the app.
Leaving citizens of Brazil without a digital payment option during a pandemic while cases are growing is dangerous.
It also may push more users in the country to embrace Bitcoin and other cryptocurrencies.
Since the outbreak first began, VISA reported an explosion in first-time digital payments. But for those without credit or debit cards, such as mom-and-pop shops that relied on WhatsApp, another option is needed.
Bitcoin is already replacing traditional banking services in some areas of Latin America. LocalBitcoin data from the country also points to the growing acceptance of the first-ever cryptocurrency.
With such a large hole left behind from the Central Bank suspending WhatsApp, and with PIX not ready until the end of the year, will more Brazilians turn towards Bitcoin?