Brazil's Central Bank Prohibits Stablecoin and Crypto Usage in Cross-Border Payment Settlements

The Central Bank of Brazil has introduced a ban on the use of stablecoins and cryptocurrencies for settling international remittances by electronic foreign exchange providers. This update, outlined in BCB Resolution No. 561 published on April 30, revises the rules governing Brazil's regulated digital international payment system. The new regulations will come into effect on October 1, with adaptation deadlines extending into 2027. Transactions between an eFX provider and its foreign counterpart must now be conducted through a foreign exchange transaction or a non-resident real-denominated account in Brazil, with the use of cryptocurrencies no longer being an option. Remittance companies are no longer allowed to accept reais from customers, convert them into stablecoins such as USDT or USDC, or bitcoin, and then settle the payment abroad using blockchain technology. However, the ban does not extend to cryptocurrency trading, and investors are still free to buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers, as per Resolution BCB No. 521, which took effect on February 2. The new resolution effectively closes the payment rail used by regulated eFX firms for cross-border transactions. This change primarily affects companies such as Wise, Nomad, and Braza Bank, which had incorporated stablecoin settlement into their cross-border payment flows. For instance, Nomad utilizes Ripple's network to transfer funds between Brazil and the US, settling the transactions in stablecoins, while Braza Bank has issued a real-backed stablecoin on the XRP Ledger. Brazil's cryptocurrency market processes between $6 billion and $8 billion monthly, with stablecoins accounting for approximately 90% of the volume, according to data from Receita Federal. The country ranked fifth globally in terms of crypto adoption in 2025, up from tenth the previous year, with around 25 million Brazilians holding or transacting in cryptocurrencies. Resolution 561 also imposes restrictions on eFX, limiting it to institutions authorized by the BCB, including banks, Caixa Econômica Federal, securities and FX brokers, and payment institutions acting as e-money issuers or acquirers. Firms without authorization can continue operating but must apply for it by May 31, 2027, and are required to use segregated accounts for client funds and submit detailed monthly reports. On the other hand, Resolution 561 expands the scope of eFX in one aspect by allowing providers to handle transfers related to financial and capital market investments in Brazil or abroad, with a cap of $10,000 per transaction. The same limit applies to digital payment solutions that are not integrated with e-commerce platforms. This regulatory move is the second front in a broader push to regulate the industry. In March, industry associations representing over 850 companies pushed back against the proposed extension of Brazil's IOF financial transaction tax to stablecoin operations. Brazil's regulator is effectively drawing a line for the coexistence of cryptocurrencies in the market, while restricting their use as infrastructure for eFX settlements.