Brazil Central Bank Prohibits Use of Stablecoins and Cryptocurrencies for 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. The new rule, outlined in BCB Resolution No. 561, updates the regulations for Brazil's digital international payment system and will come into effect on October 1, with a phased implementation period extending into 2027. The resolution prohibits payments between a provider and its foreign counterpart from being settled using cryptocurrencies, instead requiring the use of traditional foreign exchange transactions or non-resident real-denominated accounts in Brazil. While the regulation does not prohibit cryptocurrency trading, it does restrict the use of cryptocurrencies as a settlement option for cross-border payments. This change is expected to impact companies that had previously utilized stablecoins for settlement, such as Wise, Nomad, and Braza Bank. Brazil's cryptocurrency market, which sees monthly transactions of $6-8 billion, will need to adapt to the new regulations. The resolution also introduces restrictions on which institutions can operate as electronic foreign exchange providers, limiting it to authorized banks, securities brokers, and payment institutions. Furthermore, the rule expands the scope of electronic foreign exchange to include transfers related to financial and capital market investments, with a transaction limit of $10,000. This regulatory move is part of a broader effort to establish clear guidelines for the use of cryptocurrencies in Brazil, with the central bank aiming to define the boundaries for their existence in the market.