Fidelity: Rio de Janeiro Crypto Adoption is Only the Beginning

Rio De Janeiro is putting crypto on its balance sheet, and it won’t be long before other governments get FOMO, Fidelity researchers said

by Casey Wagner /

January 14, 2022 04:47 pm

Rio de Janeiro. Source: Shutterstock

Rio de Janeiro Mayor Eduardo Paes said the Brazilian city will put 1% of its treasury into crypto
The announcement is in line with Fidelity Digital Asset researchers’ predictions

Brazil’s second-largest city is allocating 1% of its treasury to cryptocurrencies, Rio de Janeiro mayor Eduardo Paes said Friday.

The announcement confirms a 2022 prediction from Fidelity Digital Asset researchers: that more governments and central banks will acquire digital assets. It comes down to keeping up appearances and staying on top of new innovations, they said.

Newsletter

Subscribe to The Breakdown

“We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers,” Fidelity Digital Asset researchers wrote in a report published on Jan. 6, 2022.

Other cities and sovereign states are going to have to start thinking ahead if they want to maintain an edge, even if the value proposition of cryptocurrencies is not immediately clear, researchers said.

“While Rio de Janeiro is a city, and technically the mayor mentioned cryptocurrency, not bitcoin specifically, we see the overall game theory as the same,” said Chris Kuiper, head of research at Fidelity Digital Assets. “In other words, entities are viewing bitcoin acquisition now as a small insurance premium to pay.”

Paes also mentioned plans to offer citizens who pay property taxes (known in Brazil as IPTU) in bitcoins a discount, according to a report from the Brazilian newspaper O Globo.

Long-time cryptocurrency fan Miami Mayor Francis Suarez also spoke at the Rio Innovation Week summit where Paes made the announcement. Suarez is looking to allocate a portion of Miami’s treasury to digital assets, he said last year.

Get the news in your inbox. Explore Blockworks newsletters:

The Breakdown: Decoding crypto and the markets. Daily.
0xResearch: Alpha in your inbox. Think like an analyst.

Tags

Newsletter

The Breakdown

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Digital Asset Summit 2026

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

buy tickets learn more

recent research

Research

Kinetiq Protocol: From LST Infrastructure to HIP-3 Deployer

Kinetiq has established itself as Hyperliquid's dominant liquid staking protocol, holding 82.5% of LST market share with $610M in TVL. The protocol is now expanding beyond its kHYPE staking core into higher take-rate verticals: iHYPE for institutional custody rails, Launch for HIP-3 capital formation, and Markets for builder-deployed perpetuals. We view Markets, launching Jan. 12, as the highest-potential product line given its mechanically scalable, activity-linked unit economics. Near-term revenue remains anchored by kHYPE's KIP-2 fee schedule (~$1.6M annualized), while Markets provides embedded optionality if HIP-3 economics normalize post-Growth Mode. KNTQ's setup is relatively clean: zero insider unlocks until November 2026, 6.2% buyback yield from staking revenue, and cleared airdrop overhang. Risks center on unproven Markets execution, declining kHYPE TVL despite ongoing incentives, and competition from Hyperliquid's native initiatives.

by Shaunda Devens