Brazil’s Central Bank (Banco Central do Brasil, BCB) has proposed new regulations aimed at restricting the transfer of foreign currency-backed stablecoins, such as Tether’s USDT, to self-custodial wallets like MetaMask. This initiative is part of a broader effort to strengthen oversight of the cryptocurrency market and improve control over foreign exchange operations.
Announced on November 29, 2024, the draft regulation seeks to amend existing rules governing virtual asset service providers (VASPs) operating in Brazil’s foreign exchange market. Under the proposed framework, VASPs would be obligated to collect and report detailed customer and transaction information to the Central Bank. The consultation period for this proposal is open until February 28, 2025, allowing market participants and other stakeholders to submit feedback.
Industry analysts have expressed concerns that these restrictions may negatively affect Brazil’s dynamic crypto sector, where stablecoins play a critical role in facilitating cross-border transactions. According to Chainalysis, Brazil received over $90 billion in digital assets from July 2023 to June 2024, with stablecoins accounting for approximately 70% of crypto flows from local to global exchanges. The new rules could impact the widespread use of stablecoins in business-to-business cross-border payments.
The Central Bank has emphasized that the regulatory initiative is intended to align Brazil’s financial system with the realities of digital assets while preserving the integrity of international capital flows. This move aligns with global efforts to tighten cryptocurrency regulations to mitigate risks related to investor protection, cybersecurity, and financial stability.
As the public consultation period continues, the cryptocurrency community in Brazil is closely watching the regulatory process, given the significant implications these rules could have on the country’s digital asset landscape.
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