Brazil Considers Banning Stablecoin Withdrawals to Self-Custodial Wallets
The Central Bank of Brazil (BCB) reportedly aims to prevent centralized exchanges from allowing their users to withdraw stablecoins to self-custodial wallets.
Transfers of stablecoins between residents would be restricted in cases in which Brazilian law allows payments in foreign currencies, CryptoSlate reported Friday (Nov. 29), citing the central bank’s public consultation notice on its regulatory proposal.
“The initiative reflects our commitment to adapting the financial system to the realities of digital assets while safeguarding the integrity of international capital flows,” the BCB said in the report.
The BCB is responsible for creating rules for the crypto industry in Brazil under a crypto regulation bill approved in the country in December 2022, according to the report.
The public consultation on its proposal will be open until Feb. 28, per the report.
It was reported in October that Brazil’s central bank governor, Roberto Campos Neto, said the bank is preparing to introduce regulations for stablecoins and asset tokenization in 2025 as part of a broader effort to address the growing prominence of digital assets in the country’s financial ecosystem.
The central bank chief said that stablecoins and tokenized assets have become increasingly popular in Brazil and that the demand for stablecoins has been driven in part by their association with tax evasion and other illicit activities.
The crypto regulation bill signed into law in December 2022 created crypto payment regulations that legalized the use of cryptocurrencies as a payment method within Brazil, created a new category of crime called “fraud involving virtual assets,” and mandated the creation of a “virtual service provider” license.
The legislation came at a time when crypto advocates in Brazil had been calling for more oversight of the sector in the wake of the collapse of the cryptocurrency exchange FTX.
In August, Latin American eCommerce giant Mercado Libre launched a new U.S. dollar-pegged stablecoin in Brazil through its financial arm, Mercado Pago.
In May, stablecoin issuer Circle officially launched in Brazil, saying it aimed to offer its USD Coin to new users in South America’s largest country. As part of its rollout in the country, Circle joined forces with BTG Pactual, the largest investment bank in Latin America, to serve as its direct USDC distribution partner in Brazil.
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