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

In a move to regulate digital international payments, the Central Bank of Brazil has introduced a ban on the use of stablecoins and cryptocurrencies for settling overseas remittances by electronic foreign exchange providers. This update, outlined in BCB Resolution No. 561, applies to Brazil's regulated system for digital international payments and takes effect on October 1, with adaptation deadlines extending into 2027. The new rule stipulates that 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, excluding the use of cryptocurrencies as a settlement option. While this ban restricts the use of cryptocurrencies for cross-border payments, it does not prohibit crypto trading, allowing investors to continue buying, selling, holding, and transferring cryptocurrencies through authorized virtual asset service providers. The central bank's decision targets companies that have integrated stablecoin settlement into their cross-border payment flows, such as Wise, Nomad, and Braza Bank. Brazil's crypto market, which processes between $6 billion and $8 billion monthly, will likely feel the impact of this ban, particularly given that stablecoins account for approximately 90% of the market's 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, the rule expands eFX to include transfers related to financial and capital market investments, both domestically and internationally, with a transaction limit of $10,000. This regulatory development marks the second phase of a broader effort to oversee the crypto market in Brazil, following industry pushback against the proposed extension of the IOF financial transaction tax to stablecoin operations in March.