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

In a recent move, Brazil's central bank has prohibited the use of stablecoins and other cryptocurrencies for settling international remittances by electronic foreign exchange providers. Published on April 30, BCB Resolution No. 561 updates the rules governing eFX, the country's regulated platform for digital international payments, purchases, and transfers, with the new rules set to take effect on October 1 and adaptation deadlines extending into 2027. According to the new rules, payments between an eFX provider and its foreign counterpart must be made through a foreign exchange transaction or a non-resident real-denominated account in Brazil, with cryptocurrencies no longer being a viable option. This means that a remittance company can no longer take reais from a customer, convert them into a stablecoin such as USDT or USDC, or bitcoin, and then settle the payment abroad on a blockchain. However, the new rule does not prohibit cryptocurrency trading altogether, as investors can still buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers, as per Resolution BCB No. 521, which came into effect on February 2. Instead, Resolution 561 effectively shuts down the back-end payment rail that regulated eFX firms have been using. The change is expected to impact companies such as Wise, Nomad, and Braza Bank, which had integrated stablecoin settlement into their cross-border flows. For instance, Nomad uses Ripple's network to transfer funds between Brazil and the U.S. and settles 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, with around 25 million Brazilians holding or transacting in cryptocurrencies. Additionally, the resolution restricts eFX to institutions authorized by the BCB, including banks, Caixa Econômica Federal, securities and FX brokers, and payment institutions acting as e-money issuers or acquirers. Companies without authorization can continue to operate but must apply by May 31, 2027, and are required to use segregated accounts for client funds and submit detailed monthly reports. On the other hand, Resolution 561 expands the scope of eFX in one area, allowing providers 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 move is part of a broader regulatory effort, with industry associations representing over 850 companies having pushed back against the extension of Brazil's IOF financial transaction tax to stablecoin operations in March. Brazil's regulator is effectively drawing a line for the coexistence of cryptocurrencies in the market, but not as a settlement infrastructure for eFX.