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

In a move to regulate digital international payments, Brazil's central bank has prohibited the use of stablecoins and other cryptocurrencies for settling cross-border transactions. This decision, outlined in BCB Resolution No. 561, affects electronic foreign exchange providers and takes effect on October 1, with adaptation deadlines extending into 2027. According to the new rules, payments between providers and their foreign counterparts must be conducted through traditional foreign exchange transactions or non-resident real-denominated accounts in Brazil, effectively barring the use of cryptocurrencies. Remittance companies are no longer allowed to convert customer funds into cryptocurrencies like USDT, USDC, or bitcoin to settle payments abroad on a blockchain. However, this rule does not impact crypto trading, and investors can continue to buy, sell, hold, and transfer cryptocurrencies through authorized virtual asset service providers. The change primarily targets companies that have integrated stablecoin settlement into their cross-border payment flows. For instance, Nomad uses Ripple's network to move funds between Brazil and the U.S., settling in stablecoins. Brazil's cryptocurrency market processes between $6 billion and $8 billion monthly, with stablecoins accounting for approximately 90% of the volume. The country has seen significant growth in crypto adoption, ranking fifth globally in 2025, up from tenth the previous year. Around 25 million Brazilians engage in crypto transactions or hold digital assets. The resolution also imposes restrictions on electronic foreign exchange services, limiting them to institutions authorized by the central bank, such as banks, securities brokers, and payment institutions. Unauthorized firms can continue operating but must apply for authorization by May 31, 2027, and adhere to stricter reporting and account segregation requirements. On the other hand, Resolution 561 expands the scope of electronic foreign exchange services to include transfers related to financial and capital market investments, with a transaction limit of $10,000. This regulatory move is part of a broader effort to define the role of cryptocurrencies in Brazil's financial market, drawing a clear line between their permitted use as investments and their prohibited use as infrastructure for settling cross-border payments.