Brazil's Central Bank Prohibits Use of Stablecoins and Cryptocurrencies for Cross-Border Payment Settlement

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 change, outlined in BCB Resolution No. 561, published on April 30, updates the rules governing digital international payments, purchases, and transfers. The new rule will come into effect on October 1, with adaptation deadlines extending into 2027. As a result, 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, with cryptocurrencies no longer being an option. This means that remittance firms 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 crypto trading, and investors can still buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers. The change primarily targets companies that had incorporated stablecoin settlement into their cross-border payment flows. Brazil's crypto market processes between $6 billion and $8 billion monthly, with stablecoins accounting for around 90% of the volume. The resolution also imposes restrictions on eFX providers, limiting them to BCB-authorized institutions and requiring firms without authorization to apply by May 31, 2027. Furthermore, it expands the scope of eFX to include transfers related to financial and capital market investments, subject to a $10,000 per transaction limit.