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

The Central Bank of Brazil has announced a ban on the use of stablecoins and cryptocurrencies for settling international remittances by electronic foreign exchange providers. The new regulation, outlined in BCB Resolution No. 561 and published on April 30, updates the rules governing Brazil's digital international payments system. The changes will come into effect on October 1, with a phased implementation schedule extending into 2027. Under the new rules, payments between an eFX provider and its foreign counterpart must be made through a traditional 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 them into cryptocurrencies such as USDT, USDC, or bitcoin, and then settle the payment abroad using blockchain technology. It is essential to note that this regulation does not prohibit cryptocurrency trading. Investors are still able to buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers, as per Resolution BCB No. 521, which came into effect on February 2. The new resolution specifically targets the back-end payment infrastructure used by regulated eFX firms. This change is expected to impact companies like Wise, Nomad, and Braza Bank, which had previously integrated stablecoin settlement into their cross-border payment flows. For instance, Nomad utilizes 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 a monthly transaction volume of $6 billion to $8 billion, and stablecoins accounting for approximately 90% of this 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. Approximately 25 million Brazilians currently hold or engage in cryptocurrency transactions. The resolution also imposes restrictions on eFX providers, limiting them to BCB-authorized institutions, including banks, Caixa Econômica Federal, securities and FX brokers, and payment institutions acting as e-money issuers or acquirers. Firms without authorization can continue operating but must apply for approval by May 31, 2027. They are also required to use segregated accounts for client funds and submit detailed monthly reports. On the other hand, Resolution 561 expands the scope of eFX in one key area. Providers are now permitted 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 March, industry associations representing over 850 companies expressed opposition to the proposed extension of Brazil's IOF financial transaction tax to stablecoin operations. By implementing these regulations, Brazil's regulator is establishing a clear boundary for the coexistence of cryptocurrencies in the market, while ensuring they do not serve as the underlying infrastructure for eFX settlements.