Brazil's Central Bank Prohibits Stablecoin and Cryptocurrency Settlement for Cross-Border Transactions

The Central Bank of Brazil has introduced a ban on the use of stablecoins and other cryptocurrencies for settling international transactions by electronic foreign exchange providers. This regulation, outlined in BCB Resolution No. 561, published on April 30, updates the rules governing Brazil's digital international payments system. The new rule will come into effect on October 1, with a phase-in period extending into 2027. According to the resolution, payments between electronic foreign exchange providers and their foreign counterparts must be conducted through traditional foreign exchange transactions or non-resident real-denominated accounts in Brazil, with cryptocurrencies no longer being a viable option. This means that remittance companies can no longer convert customer funds into cryptocurrencies like USDT, USDC, or bitcoin to settle payments abroad via blockchain. However, this ban does not extend to cryptocurrency trading, and investors are still allowed to buy, sell, hold, and transfer digital assets through authorized service providers. The new regulation primarily targets companies that had incorporated stablecoin settlements into their cross-border payment flows, such as Wise, Nomad, and Braza Bank. Brazil's cryptocurrency market, which processes between $6 billion and $8 billion monthly, will likely be significantly impacted, given that stablecoins account for roughly 90% of the market's volume. The resolution also imposes restrictions on electronic foreign exchange services, limiting them to institutions authorized by the Central Bank of Brazil. Additionally, it expands the scope of electronic foreign exchange to include transfers related to financial and capital market investments, albeit with a transaction limit of $10,000.