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

The Central Bank of Brazil has announced a prohibition on the use of stablecoins and cryptocurrencies, including bitcoin, for settling international remittances by electronic foreign exchange providers. This new rule, outlined in BCB Resolution No. 561, published on April 30, updates the regulatory framework for digital international payments, purchases, withdrawals, and transfers, effective October 1, with adaptation deadlines extending into 2027. The regulation stipulates that payments between an electronic foreign exchange 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 firms can no longer accept reais from customers, convert them into stablecoins like USDT or USDC, or bitcoin, and then settle the payment abroad using blockchain technology. However, the new rule does not impact cryptocurrency trading, as investors are still allowed 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 regulatory change appears to be companies such as Wise, Nomad, and Braza Bank, which had integrated stablecoin settlement into their cross-border payment flows. For instance, Nomad utilizes Ripple's network to facilitate fund transfers between Brazil and the U.S., settling in stablecoins, while Braza Bank has issued a real-backed stablecoin on the XRP Ledger. Brazil's cryptocurrency market processes between $6 billion and $8 billion monthly, with 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 about 25 million Brazilians engaging in cryptocurrency transactions. The resolution also imposes restrictions on electronic foreign exchange services, limiting them to institutions authorized by the Central Bank of Brazil, including banks, Caixa Econômica Federal, securities and FX brokers, and payment institutions acting as e-money issuers or acquirers. Unauthorized firms are required to apply for authorization by May 31, 2027, and must utilize segregated accounts for client funds while submitting detailed monthly reports. On the other hand, Resolution 561 expands the scope of electronic foreign exchange services in one key area: providers are now permitted 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 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, following industry pushback against the proposed extension of the IOF financial transaction tax to stablecoin operations in March. Essentially, Brazil's regulator is establishing boundaries for the coexistence of cryptocurrencies within the market, while excluding them from serving as infrastructure for electronic foreign exchange settlements.