Brazil's Central Bank Prohibits the 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 newly introduced BCB Resolution No. 561, which was published on April 30, updates the existing regulations for digital international payments, purchases, and transfers, and is set to take effect on October 1, with a phased implementation period extending into 2027. According to the new rules, 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 the use of cryptocurrencies being explicitly prohibited. This means that a remittance company is no longer allowed to accept reais from a customer, convert the funds into a stablecoin such as USDT or USDC, or bitcoin, and then settle the payment abroad using a blockchain network. However, it's worth noting that the new regulation does not impose a blanket ban on cryptocurrency trading. Investors are still permitted to buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers, as per the provisions outlined in Resolution BCB No. 521, which came into effect on February 2. The latest move by the Central Bank of Brazil is primarily aimed at regulating companies such as 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 facilitate the transfer of funds between Brazil and the United States, with settlements being conducted in stablecoins, while Braza Bank has issued a real-backed stablecoin on the XRP Ledger. Brazil's cryptocurrency market is currently processing transactions valued between $6 billion and $8 billion per month, with stablecoins accounting for approximately 90% of the total volume, according to data from the Receita Federal. The country has been ranked fifth globally in terms of crypto adoption in 2025, up from tenth position in the previous year, with around 25 million Brazilians either holding or transacting in cryptocurrencies. The new resolution also restricts the provision of eFX services to institutions that are authorized by the Central Bank of Brazil, including banks, Caixa Econômica Federal, securities and FX brokers, and payment institutions that act as e-money issuers or acquirers. Companies that are not authorized to provide eFX services can continue to operate, but they are required to apply for the necessary authorization by May 31, 2027. Additionally, these firms must maintain segregated accounts for client funds and submit detailed monthly reports. On the other hand, Resolution 561 expands the scope of eFX services in one key area. Providers are now permitted to handle transfers related to financial and capital market investments in Brazil or abroad, subject to 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 a clear framework for the cryptocurrency market in Brazil. In March, industry associations representing over 850 companies pushed back against a proposal to extend the country's IOF financial transaction tax to stablecoin operations. By introducing these regulations, Brazil's regulator is seeking to establish a clear boundary for the use of cryptocurrencies in the market, while also ensuring that they do not become an integral part of the country's eFX settlement infrastructure.