Brazil’s regulatory pragmatism could offer a blueprint for alternative finance

Brazil has quietly built one of the world’s most advanced ecosystems for alternative financial services, writes Lee Holmes, CEO, INFINOX 

In the global race to modernise financial infrastructure, it is not always the most developed markets leading the way. Brazil, often overlooked in institutional finance circles, has quietly built one of the world’s most advanced ecosystems for alternative financial services, not in spite of its regulatory environment, but because of it.

Over the past five years, Brazil has emerged as a case study in pragmatic financial policy. The country’s Central Bank has taken a measured, innovation-first approach to emerging technologies, most notably with the launch of Pix, its real-time payments system, and its regulatory stance on digital assets. At a time when developed markets are bogged down by compliance paralysis and reputational risk aversion, Brazil has leaned into experimentation.

Pix payment system

This posture is yielding results. In 2023 alone, data shows that Pix processed over 42 billion transactions, representing a 75% increase compared to 2022, and surpassing credit and debit card charges combined by about 23%, according to central bank data and industry group Abecs. Meanwhile, Brazil’s Securities and Exchange Commission (CVM) has taken a leadership role in crafting thoughtful oversight for crypto and blockchain-based products – aiming for transparency without stifling growth.

The contrast with Western regulatory regimes is striking. Europe’s MiCA legislation, while designed to harmonise crypto-asset regulation, introduces significant operational complexity for firms. The U.S., still without a clear federal framework, continues to pursue enforcement-led policymaking. In both cases, the result is the same: institutional hesitancy, diminished capital deployment, and a lag in global competitiveness.

From an asset management standpoint, this has real implications. Institutional investors increasingly need to evaluate jurisdictional arbitrage not just through the lens of tax and reporting, but innovation readiness. Where is tokenisation being enabled? Where is alternative finance being embraced rather than marginalised?

While much of this narrative positions emerging markets as the new champions of financial innovation, it’s worth recognising that one developed market stands apart as a benchmark for professionalising digital assets: Switzerland.

The Swiss Financial Market Supervisory Authority (FINMA) has long provided clear, risk-based guidelines that balance investor protection with innovation, earning Switzerland global recognition as a hub for digital asset infrastructure. From banking integrations to institutional-grade custody, the Swiss model shows how regulatory clarity can attract capital and talent at scale. Brazil’s evolving framework, though shaped by different socioeconomic conditions, reflects a similar ambition – suggesting it could follow a comparable trajectory as a credible jurisdiction for institutional crypto engagement.

Emerging market innovators

Brazil’s trajectory suggests that emerging markets may now be the test beds – and in some cases, the torchbearers – for the next phase of capital markets evolution. This doesn’t mean these markets are without risk. Political volatility, infrastructure gaps, and macro fragility still exist. But they are counterbalanced by policy frameworks that prioritise access, interoperability, and digital transformation.

At INFINOX, we’ve made Brazil a strategic focus, not simply as a growth market, but as a bellwether of where global finance is headed. The investor activity we see in São Paulo today mirrors behavioral shifts we’re only beginning to see in parts of Europe and Asia. Traders are more comfortable with multi-asset platforms, more open to cross-border flows, and more attuned to the role of decentralised instruments in building wealth.

For institutional allocators, this presents both a challenge and an opportunity. The challenge is reassessing traditional risk matrices that place emerging markets in a passive, high-volatility bracket. The opportunity is to identify regulatory ecosystems that are not just stable, but scalable.

Financial innovation will increasingly be a function of jurisdictional agility, not just technological advancement. Brazil is showing what’s possible when policymakers and market participants operate in tandem. The Rest of The West would do well to take note.