Brazil's Central Bank Prohibits Stablecoin and Cryptocurrency Settlement for Cross-Border Transactions

The Central Bank of Brazil has introduced a ban on the use of stablecoins and cryptocurrencies for settling international remittances by electronic foreign exchange providers. The updated rules, outlined in BCB Resolution No. 561, published on April 30, will take effect on October 1, with a phased adaptation period extending into 2027. According to the new rules, 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 firms can no longer accept reais from customers, convert them into cryptocurrencies like USDT, USDC, or bitcoin, and then settle the payments abroad using blockchain technology. However, the regulation does not prohibit cryptocurrency trading, and 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 new rule specifically targets 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 position 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. Firms 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 one area, allowing providers 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 the proposed extension of Brazil's IOF financial transaction tax to stablecoin operations. The regulator's goal is to establish a clear boundary for the coexistence of cryptocurrencies in the market, while preventing their use as infrastructure for eFX settlements.