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

The Central Bank of Brazil has announced a ban on the use of stablecoins and other cryptocurrencies for settling international transactions by electronic foreign exchange providers. This update, outlined in BCB Resolution No. 561, which was published on April 30, revises the rules governing Brazil's digital international payment system. The new regulations will take effect on October 1, with a phased implementation schedule extending into 2027. Under the new rules, payments between electronic foreign exchange providers and their foreign counterparts must be conducted through traditional foreign exchange transactions or via non-resident real-denominated accounts in Brazil, with cryptocurrencies no longer being a viable option. Remittance companies are no longer allowed to accept Brazilian reais from customers, convert them into cryptocurrencies such as USDT, USDC, or bitcoin, and then settle the payments abroad using blockchain technology. It is essential to note that this ban does not extend to cryptocurrency trading. Investors can still engage in buying, selling, holding, and transferring cryptocurrencies through authorized virtual asset service providers, as per Resolution BCB No. 521, which came into effect on February 2. Instead, Resolution 561 specifically targets the backend payment infrastructure utilized by regulated electronic foreign exchange firms. This change particularly affects companies like Wise, Nomad, and Braza Bank, which had previously incorporated stablecoin settlement into their cross-border payment flows. For instance, Nomad utilizes Ripple's network to transfer funds between Brazil and the United States, settling the transactions in stablecoins, while Braza Bank has issued a real-backed stablecoin on the XRP Ledger. Brazil's cryptocurrency market is substantial, with monthly transactions ranging from $6 billion to $8 billion, and stablecoins accounting for approximately 90% of the volume, according to data from Receita Federal. The country has seen significant growth in crypto adoption, ranking fifth globally in 2025, up from tenth the previous year. Approximately 25 million Brazilians are involved in cryptocurrency transactions. Resolution 561 also imposes restrictions on electronic foreign exchange providers, limiting them to institutions authorized by the Central Bank of Brazil, including banks, Caixa Econômica Federal, securities and foreign exchange brokers, and payment institutions acting as e-money issuers or acquirers. Companies without authorization can continue operating but must apply for permission by May 31, 2027. They are required to use segregated accounts for client funds and submit detailed monthly reports. On the other hand, Resolution 561 expands the scope of electronic foreign exchange in one key area. Providers are now permitted 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 part of a broader effort to establish clearer guidelines for the cryptocurrency market. In March, industry associations representing over 850 companies expressed opposition to the proposed extension of Brazil's IOF financial transaction tax to stablecoin operations. Brazil's regulatory approach aims to establish a clear boundary for the coexistence of cryptocurrencies within the market, while preventing their use as infrastructure for electronic foreign exchange settlements.