Brazil’s central bank has introduced a draft proposal for strict regulations on stablecoins, aiming to align crypto operations with traditional financial rules.
Announced on November 29, the proposal includes a ban on transferring foreign-backed stablecoins to self-custody wallets. If approved, crypto exchanges would prohibit users from moving these tokens to private wallets, treating them similarly to other financial assets like foreign investments.
The central bank justifies the move as a measure to mitigate risks related to cybersecurity, illicit activities, and economic instability while promoting market stability and investor protection. Service providers would also be required to comply with global financial standards and share customer information with the regulator.
Despite acknowledging the benefits of digital assets, such as enhancing foreign exchange efficiency and investment opportunities, the central bank highlights the need for stricter oversight. The proposal targets stablecoins pegged to foreign currencies, which are widely used in Brazil’s crypto market.
Brazil’s cryptocurrency sector has experienced significant growth, with $90 billion in digital assets traded from mid-2023 to mid-2024, according to Chainalysis. Stablecoins, especially USD-backed ones, account for 70% of these transactions, often used in cross-border trades to preserve value.
While regulation may enhance security and transparency, critics argue it could stifle innovation and Brazil’s position as a crypto leader in Latin America.
Public feedback on the proposal is open until February 28, 2025, though the central bank will make the final decision. The global stablecoin market, currently valued at $190 billion, underscores the importance of this regulatory debate.
