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

The Central Bank of Brazil has implemented a ban on the use of stablecoins and other digital currencies for settling international remittances by electronic foreign exchange providers. The new rules, outlined in BCB Resolution No. 561, were published on April 30 and will take effect on October 1, with adaptation deadlines extending into 2027. According to the new regulations, payments between electronic foreign exchange providers and their foreign counterparts must be conducted 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 remittance companies can no longer accept reais from customers, convert them into cryptocurrencies like USDT, USDC, or bitcoin, and then settle the payments abroad using blockchain technology. However, the new rule does not prohibit cryptocurrency trading, and investors are still allowed to buy, sell, hold, and transfer digital assets through authorized virtual asset service providers. The change primarily affects companies that had integrated stablecoin settlement into their cross-border payment flows, such as Wise, Nomad, and Braza Bank. Brazil's cryptocurrency market processes between $6 billion and $8 billion monthly, with stablecoins accounting for approximately 90% of the volume. The country has seen significant growth in crypto adoption, ranking fifth globally in 2025, with around 25 million Brazilians holding or transacting in cryptocurrency. The resolution also imposes restrictions on electronic foreign exchange providers, limiting them to institutions authorized by the Central Bank of Brazil, such as banks, securities brokers, and payment institutions. Unauthorized firms can continue operating but must apply for authorization by May 31, 2027, and adhere to strict reporting and account segregation requirements. The new regulation expands the scope of electronic foreign exchange in certain areas, allowing providers to handle transfers related to financial and capital market investments in Brazil or abroad, with a transaction limit of $10,000. This development is part of a broader regulatory effort, with industry associations pushing back against the potential extension of the IOF financial transaction tax to stablecoin operations. The Central Bank of Brazil is effectively drawing a line for cryptocurrency to coexist in the market, albeit not as a settlement infrastructure for electronic foreign exchange transactions.