São Paulo Chooses Private Blockchain for Stable, Transparent Microloans

São Paulo has launched a blockchain-backed microloan program targeting small rural producers, aiming to streamline access to credit through a closed ecosystem developed by Brazilian fintech firm Tanssi. The initiative, set to begin next month, offers loans of up to R$15,000 ($2,800) via a mobile app and physical payment terminals, with blockchain infrastructure operating entirely in the background to ensure transparency and risk mitigation according to the program announcement. The system, designed to track how funds are used, avoids public blockchains like Ethereum or Solana due to concerns over unpredictable transaction fees and network congestion, opting instead for Tanssi's dedicated blockchain to guarantee cost stability and reliability.

The program builds on a 2024 pilot in the town of Santo Antônio da Alegria, where a token-based local currency distributed municipal aid such as food benefits within a restricted ecosystem. That system blocked spending on non-essential categories, like gambling, enabling local officials to maintain control over public resource allocation. São Paulo's new microloan project expands this model, addressing challenges faced by small producers who often encounter delays and high costs in traditional credit channels. Tanssi's infrastructure allows administrators to monitor credit flows, reducing misuse and enhancing lender confidence while ensuring predictable transaction parameters critical for public funding according to financial analysis.

Brazil's broader crypto regulatory landscape is also evolving. At the national level, the government is considering applying the IOF financial transaction tax to cross-border cryptocurrency and stablecoin transfers, classifying them as foreign-exchange operations. This aligns with concerns over regulatory gaps as stablecoins dominate the market-accounting for two-thirds of transactions in the first half of 2025-while Bitcoin's share remains at 11%. Authorities aim to ensure digital asset flows adhere to existing foreign-exchange rules, reflecting a growing emphasis on oversight amid rapid sector growth.

The São Paulo initiative highlights a shift in Brazil's blockchain strategy, where local governments and private entities are advancing targeted financial tools despite the central bank's delayed rollout of Drex, the national digital currency. While Drex faces bureaucratic hurdles, municipal projects like microloans and aid distribution systems demonstrate blockchain's potential to address specific economic challenges. Tanssi's choice to prioritize a private blockchain over public networks underscores the importance of predictability in public-sector applications, where cost volatility on platforms like Solana could disrupt budgeting and operational planning according to industry experts.

As Brazil's crypto transaction volume reached 227 billion reais ($42.8 billion) in the first half of 2025-a 20% year-on-year increase-regulators are under pressure to balance innovation with compliance. The São Paulo microloan program, coupled with proposed tax adjustments, signals a dual focus: fostering blockchain-driven solutions for local needs while tightening oversight of cross-border digital asset activity to prevent regulatory arbitrage.