Brazil's Central Bank Prohibits Stablecoin and Crypto Settlement for Cross-Border Payments

In a significant move, Brazil's central bank has prohibited 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 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 eFX provider and its foreign counterpart must be conducted through a traditional foreign exchange transaction or a non-resident real-denominated account in Brazil, with cryptocurrencies no longer being a viable option. This means that a remittance company can no longer accept reais from a customer, convert the funds into a stablecoin such as USDT or USDC, or bitcoin, and then settle the payment abroad using a blockchain. However, it's crucial to note that this regulation does not impact the trading of cryptocurrencies. Investors are still free 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 primary target of this change appears to be companies such as Wise, Nomad, and Braza Bank, which had integrated stablecoin settlements into their cross-border payment flows. For instance, Nomad utilizes Ripple's network to facilitate fund transfers between Brazil and the U.S., settling these transactions in stablecoins, while Braza Bank has issued a real-backed stablecoin on the XRP Ledger. Brazil's cryptocurrency market is substantial, with monthly transactions ranging from $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 about 25 million Brazilians either holding or transacting in cryptocurrencies. The resolution also imposes restrictions on eFX providers, limiting them to institutions authorized by the BCB, including banks, Caixa Econômica Federal, securities and FX brokers, and payment institutions that act as e-money issuers or acquirers. Companies without authorization can continue operating but must apply for it by May 31, 2027. Additionally, these firms are required to use segregated accounts for client funds and submit detailed monthly reports. On a different note, Resolution 561 expands the scope of eFX in certain areas. Providers are now allowed 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 marks the second front in a broader campaign to oversee the cryptocurrency market. Earlier in March, industry associations representing over 850 companies pushed back against proposals to extend Brazil's IOF financial transaction tax to include stablecoin operations. In essence, Brazil's regulator is establishing clear boundaries for the coexistence of cryptocurrencies within the market, excluding their use as infrastructure for eFX settlements.