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

Brazil's central bank has introduced a ban on the use of cryptocurrencies, including stablecoins and bitcoin, for settling international remittances by electronic foreign exchange providers. The updated regulations, outlined in BCB Resolution No. 561, which was published on April 30, will take effect on October 1, with a phased implementation schedule extending into 2027. Under the new rules, payments between an electronic foreign exchange provider and its foreign counterpart must be made through a foreign exchange transaction or a non-resident real-denominated account in Brazil, with cryptocurrencies no longer being a viable option. Remittance companies are no longer allowed to accept reais from customers, convert the funds into cryptocurrencies such as USDT, USDC, or bitcoin, and then settle the payments abroad using blockchain technology. However, the new regulations do not prohibit the trading of cryptocurrencies. Investors can still buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers, as outlined in Resolution BCB No. 521, which came into effect on February 2. The updated rules specifically target companies that have incorporated stablecoin settlement into their cross-border payment flows, such as Wise, Nomad, and Braza Bank. For instance, Nomad uses Ripple's network to transfer funds between Brazil and the US, 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 transaction volumes 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 holding or transacting in cryptocurrencies. The resolution also imposes restrictions on electronic foreign exchange providers, limiting their operations to institutions authorized by the central bank, including banks, Caixa Econômica Federal, securities and FX brokers, and payment institutions acting as e-money issuers or acquirers. Companies without authorization can continue to operate but must apply for approval by May 31, 2027, and must use segregated accounts for client funds and submit detailed monthly reports. On the other hand, the resolution expands the scope of electronic foreign exchange providers, allowing them 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 clear guidelines for the cryptocurrency market in Brazil. In March, industry associations representing over 850 companies pushed back against proposals to extend the country's IOF financial transaction tax to stablecoin operations. The central bank's decision draws a clear line for the coexistence of cryptocurrencies in the market, while restricting their use as infrastructure for electronic foreign exchange settlement.