The Central Bank of Brazil (BCB) has recently announced a new regulatory proposal that would restrict centralized exchanges from allowing users to withdraw stablecoins to self-custodial wallets. This move comes as part of the crypto regulation bill approved in Brazil in December 2022, which tasked the BCB with creating rules for the crypto industry in the country.
The proposed regulations aim to enhance legal certainty for businesses and individuals while promoting competition and efficiency in the foreign exchange market. The rules outline three key activities for virtual asset service providers operating in the foreign exchange market: facilitating international payments and transfers via crypto, offering exchange or custody services for tokens denominated in Brazilian reais for non-residents, and managing transactions involving tokens pegged to foreign currencies.
Under the new regulations, crypto investments, whether inbound or outbound, would be subject to the same regulatory standards as traditional investments. This means that external credit, direct foreign investment, and Brazilian capital abroad involving crypto would need to comply with existing international capital regulations.
Additionally, centralized exchanges would be required to obtain a foreign exchange license in order to offer services related to stablecoins. The public consultation for these proposed regulations will remain open until February 28, 2025, allowing market participants to provide feedback to the regulator. However, the BCB reserves the right to make final decisions based on the consultation document.
According to data from Brazil’s Internal Revenue Service (RFB), nearly 4.4 million Brazilians transferred $4.2 billion in crypto in September. Stablecoins accounted for 71.4% of the total value transferred, with Tether USD (USDT) being the most popular stablecoin among Brazilian crypto investors, with $2.77 billion transacted.
Overall, the regulatory proposal by the Central Bank of Brazil reflects a commitment to adapting the financial system to the digital asset landscape while ensuring the integrity of international capital flows. The aim is to create a regulatory framework that balances the needs of the market with the requirements for a transparent and compliant crypto industry in Brazil.