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

In a recent move, Brazil's central bank has announced a ban on the use of stablecoins and other cryptocurrencies for settling international transactions. This decision, outlined in BCB Resolution No. 561, impacts electronic foreign exchange providers and will come into effect on October 1, with a phased implementation schedule extending into 2027. According to the new rules, all payments between an eFX provider and its foreign counterpart must be conducted via a foreign exchange transaction or through a non-resident real-denominated account in Brazil, effectively barring the use of cryptocurrencies. This means that remittance companies can no longer convert customer funds into cryptocurrencies like USDT, USDC, or bitcoin to facilitate cross-border payments. However, the ban does not extend to cryptocurrency trading, and investors are still free to buy, sell, and hold digital assets through authorized service providers. The new regulation targets companies that have integrated stablecoin settlements into their cross-border payment flows, such as Wise, Nomad, and Braza Bank. For instance, Nomad utilizes Ripple's network to transfer funds between Brazil and the U.S., settling the transactions in stablecoins. 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. The country has seen significant growth in crypto adoption, ranking fifth globally in 2025, up from tenth the previous year. The resolution also imposes restrictions on eFX providers, limiting their operations to BCB-authorized institutions, including banks, securities brokers, and payment institutions. Unauthorized firms must apply for authorization by May 31, 2027, and comply with stringent reporting and account segregation requirements. On the other hand, the new regulation expands the scope of eFX to include transfers related to financial and capital market investments, both domestically and internationally, with a transaction limit of $10,000. This move is part of a broader regulatory effort, with industry associations pushing back against the proposed extension of the IOF financial transaction tax to stablecoin operations. The regulator's goal is to establish clear boundaries for the coexistence of cryptocurrencies and traditional financial systems.