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 remittances by electronic foreign exchange providers. This new rule, outlined in BCB Resolution No. 561, was published on April 30 and will come into effect on October 1, with adaptation deadlines extending into 2027. The regulation stipulates that payments between an eFX provider and its foreign counterpart must be conducted through a foreign exchange transaction or a non-resident real-denominated account in Brazil, excluding the use of cryptocurrencies as a settlement option. This means that remittance companies can no longer convert customer funds into cryptocurrencies like USDT, USDC, or bitcoin to settle payments abroad on a blockchain. However, the rule does not prohibit cryptocurrency trading, and investors are still allowed to buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers. The new regulation primarily targets companies that have integrated stablecoin settlement 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 be significantly impacted, with stablecoins accounting for roughly 90% of the volume. The resolution also imposes restrictions on eFX providers, limiting their operations to BCB-authorized institutions and requiring firms without authorization to apply by May 31, 2027. Furthermore, the rule expands the scope of eFX to include transfers related to financial and capital market investments, both domestically and internationally, with a transaction limit of $10,000.