The Central Bank of Brazil (BCB) has introduced a proposal to restrict stablecoin withdrawals to self-custodial wallets through centralized exchanges.
The move, outlined in a public consultation, aims to regulate the transfer of stablecoins, referred to as “tokens denominated in foreign currencies.” Transfers between residents will be limited in scenarios where Brazilian law permits payments in foreign currencies.
Brazil in Crypto Regulations
The proposal is part of a broader crypto regulatory framework established by the Brazilian government in December 2022. This legislation empowered the BCB to create rules for the cryptocurrency market.
According to the central bank, the restrictions are necessary to safeguard the integrity of international capital flows and adapt the financial system to the realities of digital assets.
BCB President Roberto Campos Neto has repeatedly emphasized the need to regulate stablecoins. In October 2024, he stated that the increasing demand for these tokens in Brazil was largely tied to tax evasion and illicit activities.
Campos Neto has called for comprehensive oversight, suggesting that regulations for stablecoins and asset tokenization will take effect in 2025.
What Change Does it Bring?
The proposed regulation outlines specific responsibilities for virtual asset service providers (VASPs) operating in Brazil. These include facilitating international payments through cryptocurrencies, managing tokens pegged to the Brazilian real for non-residents, and overseeing transactions involving stablecoins tied to foreign currencies.
Crypto-related investments will also be subject to the same regulatory standards as traditional financial instruments, aligning the market with existing international capital flow regulations.
One significant aspect of the proposal is its focus on controlling how residents use stablecoins. The BCB plans to restrict transfers to self-custodial wallets to prevent misuse. This measure, the central bank argues, is necessary to ensure compliance with foreign exchange and capital control laws.
The public consultation period for the proposal will remain open until February 28, 2025, allowing stakeholders to submit their feedback. However, the central bank retains the authority to implement the rules as outlined, regardless of public input.
Cryptocurrencies and Brazil
Brazil’s growing crypto market has become a focal point for regulators. Recent data from the Internal Revenue Service (RFB) revealed that nearly 4.4 million Brazilians transacted $4.2 billion in cryptocurrencies in September 2024 alone.
Stablecoins, known for their lower volatility compared to cryptocurrencies like Bitcoin, have gained popularity but also raised concerns over their use in illicit activities.
By introducing these measures, the BCB aims to bring the crypto industry in line with traditional financial systems. The proposed rules are expected to reduce risks while creating a more structured environment for digital assets. As the consultation process unfolds, the focus will be on how these changes impact Brazil’s dynamic crypto landscape.