Brazil's Central Bank Prohibits Stablecoin and Crypto Usage in Cross-Border Payment Settlements

The Central Bank of Brazil has officially prohibited the use of cryptocurrencies, including stablecoins and bitcoin, for settling international remittances by electronic foreign exchange providers. This updated regulation, outlined in BCB Resolution No. 561, was published on April 30 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 through a traditional foreign exchange transaction or a non-resident real-denominated account in Brazil, effectively barring the use of cryptocurrencies. This means that remittance companies can no longer accept Brazilian reals from customers, convert them into cryptocurrencies like USDT, USDC, or bitcoin, and then settle the payments abroad using blockchain technology. However, it's essential to note that this regulation does not prohibit cryptocurrency trading altogether, as investors are still allowed to buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers, as per Resolution BCB No. 521, which became effective on February 2. The primary impact of Resolution 561 is the closure of the back-end payment rail that was previously used by regulated eFX firms for cross-border transactions. Companies such as Wise, Nomad, and Braza Bank, which had incorporated stablecoin settlement into their cross-border payment flows, will be directly affected by this change. For instance, Nomad utilizes Ripple's network to transfer funds between Brazil and the U.S., 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, with around 25 million Brazilians either holding or transacting in cryptocurrencies. The resolution also imposes restrictions on eFX providers, limiting them to BCB-authorized institutions, which include banks, Caixa Econômica Federal, securities and FX brokers, and payment institutions that act as e-money issuers or acquirers. Firms without the necessary authorization can continue operating but must submit their applications by May 31, 2027, and adhere to stricter requirements, such as using segregated accounts for client funds and filing detailed monthly reports. On the other hand, Resolution 561 expands the scope of eFX in certain areas, enabling 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 regulatory move is part of a broader effort to establish a clear framework for the cryptocurrency market in Brazil, with the central bank drawing a distinct line between the permitted use of cryptocurrencies as investment assets and their prohibited use as infrastructure for eFX settlements.