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

The Central Bank of Brazil has introduced a ban on the use of stablecoins and other cryptocurrencies for settling international remittances by electronic foreign exchange providers. Published on April 30, BCB Resolution No. 561 updates the regulatory framework for digital international payments, purchases, and transfers, with the new rules taking effect on October 1 and adaptation deadlines extending into 2027. Under the new regulations, 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, with cryptocurrencies no longer being a viable option. This means that remittance companies can no longer accept reais from customers, convert the funds 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 can still buy, sell, hold, and transfer digital assets through authorized virtual asset service providers, as per Resolution BCB No. 521, which came into effect on February 2. Instead, Resolution 561 targets the back-end payment rail used by regulated eFX firms. The regulatory change is expected to impact companies such as Wise, Nomad, and Braza Bank, which had incorporated 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, with around 25 million Brazilians holding or transacting in cryptocurrencies. Resolution 561 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. Companies without authorization can continue operating but must apply for approval by May 31, 2027, and are 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 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. The same limit applies to digital payment solutions that are not integrated with e-commerce platforms. This regulatory move is part of a broader push to establish clearer guidelines for the cryptocurrency market. In March, industry associations representing over 850 companies pushed back against proposals to extend Brazil's IOF financial transaction tax to stablecoin operations. By introducing these regulations, Brazil's regulator is establishing boundaries for the coexistence of cryptocurrencies in the market, while preventing their use as infrastructure for eFX settlement.