The Brazilian Central Bank (BCB) has put forward a regulatory proposal that is set to impact the utilization of stablecoins. Under this proposal, users will be restricted from withdrawing stablecoins to self-custodial wallets on centralized exchanges.
Only specific transfers of what are termed “tokens denominated in foreign currencies” among residents will be permitted, provided Brazilian law already sanctions foreign currency payments.
The BCB states that this step is integral to its strategy of regulating the expanding digital asset market in the nation, in accordance with the crypto regulation law enacted in December 2022. The central bank also has the objective of ensuring Brazil’s financial system can adjust to the new digital asset landscape while safeguarding international capital flows.
The public consultation regarding the proposal is underway and will remain open until February 28, 2025. During this period, market participants have the opportunity to convey their feedback to the regulator, although the BCB is not obligated to adopt all the suggestions.
This proposed regulation additionally mandates that centralized exchanges must obtain a foreign exchange license to provide services associated with stablecoins. Moreover, crypto transactions, both incoming and outgoing, will be regulated in a manner similar to traditional investments, with compliance essential for activities such as foreign investment or crypto capital abroad.
Stablecoins already constitute a substantial portion of Brazil’s crypto market. As per Brazil’s Internal Revenue Service (RFB), Brazilians transferred $4.2 billion in crypto in September, with stablecoins making up a major part, approximately $3 billion, predominantly in Tether USD (USDT).
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