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Media reports say Coinbase is nearing the end of negotiations to buy Mercado Bitcoin's parent company, 2TM.
Key points
- According to Brazilian newspaper reports, Coinbase is close to a deal with 2TM, Mercado Bitcoin's parent company.
- Mercado Bitcoin is the largest crypto exchange in Latin America. If it goes through, the deal would give Coinbase a significant foothold in the region.
Local media in Brazil report that the popular cryptocurrency exchange, Coinbase, is close to taking a major step into the Latin American crypto market. The news comes as Rio de Janeiro confirms it will accept crypto payments for property taxes starting next year.
According to Estadão, Coinbase has been in negotiations to buy 2TM -- which owns Mercado Bitcoin -- since last year. Brazil's third-largest newspaper says the deal may be completed by April. As yet, neither company has commented on the rumors.
What are 2TM and Mercado Bitcoin?
2TM describes itself as an "integrated ecosystem of financial technology companies created to transform the future of the new digital economy." The firm, which is valued at around $2.2 billion, is a major player in all kinds of digital assets throughout the region. It owns several crypto-related and financial players, including:
- Mercado Bitcoin: Popular Latin American cryptocurrency exchange
- Meubank: Digital asset wallet and account provider
- Bitrust: Digital asset custodian
- Blockchain Academy: Crypto education platform
Mercado Bitcoin has been described as 2TM's crown jewel. Last July, it raised $200 million in a Series B funding round led by Softbank. It has more than 3 million customers and the platform trades more than 70 cryptos. 2TM also bought a controlling stake in the Portugal-based cryptocurrency exchange, CriptoLoja earlier this year.
What does this mean for Coinbase?
This acquisition would be a real feather in the cap for Coinbase, which has ambitious plans to expand across the globe. Coinbase is already available in over 100 countries, including Brazil. At the end of last year, a report from the crypto platform emphasized the importance of Latin America. It stressed the fact that remittance payments make up a high percentage of GDP in various countries in the region. Finally, according to Coinbase, 50% of people in Latin America don't have bank accounts. These, and other factors, mean there's likely to be a high level of demand for cryptocurrency services, not just in Brazil but also in the rest of Latin America.
Recent analysis from Chainalysis into global crypto adoption put Brazil in the top 20 countries, saying its crypto market last year totaled around $90 billion. Plus, Rio de Janeiro announced this week it would accept crypto payments for property taxes starting in 2023. Meanwhile Brazil's central bank is developing its own centralized digital currency or GovCoin and plans to launch a pilot at some point this year. Put simply, Bitcoin (BTC) and crypto is booming in Brazil.
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Coinbase isn't the only crypto exchange that's trying to get a foothold in Brazil. Another popular exchange, Binance, recently signed an MoU with Brazilian securities brokerage firm Sim;paul Investimentos. Binance CEO Changpeng Zhao visited Brazil earlier in March and said the firm wants to strengthen its presence there.
If Coinbase can finalize this acquisition, Bloomberg reports it would be able to secure a position as market leader in Latin America. Given 2TM's presence in the rest of the region, the deal could also help Coinbase grow quickly in other countries, such as Chile, Colombia, Mexico, and Argentina.
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