Bloomberg Línea — SoftBank-backed holding company 2TM, parent company of Brazilian cryptocurrency exchange Mercado Bitcoin, is laying off 15% of its team, and which is the second round of job cuts by 2TM, which in June had already laid off 90 people, 12% of its workforce, due to what it described as “the changing global financial landscape, high-interest rates and inflation, which had a major impact on high-growth technology companies”.
This time around, the 2TM group said the challenges posed by the global economy have been affecting innovation segments across the world. But in addition to economic adversity: according to 2TM there is a “deteriorating and unfair” competitive environment in Brazil.
“We regret the loss of each professional, and, to try to reduce the impact, we will offer those who leave us a package that includes everything from the extension of the health plan and daycare assistance to outplacement assistance,” 2TM said in a statement.
‘No legal framework’
“Without the approval of the crypto assets legal framework, players who follow the laws are penalized in front of companies that ignore local rules,” 2TM added.
Mercado Bitcoin and its CEO, Reinaldo Rabelo, have long been vocal in the media in their criticisms of foreign cryptocurrency companies operating in Brazil.
As Bloomberg Línea reported in February, the bill regulating crypto assets operations in Brazil creates rules for all companies trading “virtual assets” and aims to provide legal certainty to players in the sector, which should translate into greater attractiveness for investors.
The main target of the regulation under discussion in Brazil is crypto exchanges. According to the proposal, companies in the sector will need authorization from an “organ or entity of the federal public administration” to operate, in addition to a registration in Brazil’s IRS and registration with the Council for Financial Activities Control (Coaf).
Earlier this year, Rabelo said that 2TM raised $250 million with SoftBank in 2021, “which allows us to look at the next three years”. But now the company says that in addition to reordering its portfolio, unifying 2TM’s brands, and completing the integration of the companies it bought last year, the company needed to optimize costs and reduce staff.
In November 2021, 2TM had received a $50 million investment from 10THoldings.
In May Bloomberg News reported that 2TM and Coinbase had dropped out of talks for a merger. In June, Coinbase’s CEO posted on the company’s blog that he was laying off 18% of his team, “to ensure we stay healthy during this recession”.
Latest layoffs in Latin America’s crypto world
The layoffs follow others in the crypto sector. In May, Mexican unicorn Bitso, which had received investment from Coatue and Tiger Global, laid off 80 staff. In the same month, Argentina’s Buenbit said it would lay off half its team.
At end-2021, before the fall in prices, Brazil’s cryptocurrency market was estimated to be worth $50 billion.
According to Bloomberg News, China’s Binance accounted for an average of 74% of cryptocurrency trading in Brazil’s currency in the first five months of the year, according to data compiled by Livecoins, which does not include exchange-traded funds (ETFs), and is based on information provided by brokerages. Mercado Bitcoin accounts for nearly 5%.
Even with the recent fall in cryptocurrencies’ values - reflecting the capital market scenario - and the collapse of Terra and Luna, large companies in the sector are betting on crypto assets: last month Mercado Libre launched Mercado Coin, its own cryptocurrency, which will run on the Ethereum network.
-- With information from Bloomberg News
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