Brazilian Regulators Target Foreign Currency-Backed Stablecoins
Brazil’s Central Bank (BCB) has proposed a regulatory proposal that would ban platforms from allowing Stablecoin Withdraw money to self-service wallet.
The move is part of the country’s broader efforts to regulate its rapidly expanding crypto industry.
Brazil aims to regulate cryptocurrencies with new stablecoin restrictions
The regulatory draft published on November 29 specifically targets “tokens denominated in foreign currencies.” Under the proposal, Brazilian cryptocurrency exchanges will no longer be allowed to transfer these stablecoins to Self-custody wallet.
The proposal “prohibits virtual asset service providers from transferring virtual assets denominated in foreign currencies to self-custodial portfolios” point out.
Furthermore, the proposal aims to harmonize Cryptocurrency handling Existing financial instruments such as foreign direct investment and external credit. Virtual asset service providers must comply with international financial regulations and report customer information to the central bank.
The BCB highlighted the potential benefits of virtual assets, including increasing the efficiency of foreign exchange services and investment options. However, the agency also noted risks to investor protection, cybersecurity and financial stability.
“The adoption of[virtual assets]also raises concerns, including interconnection with traditional models, regarding consumer and investor protection, privacy, cybersecurity, prevention of use for illicit purposes, financial and market integrity, and safeguarding finances. and macroeconomic stability,” the regulator said.
With this in mind, the BCB believes its measures will bring legal clarity to businesses handling international crypto payments and foreign currency-backed digital assets.
This regulatory step follows Brazil’s Cryptocurrency Market Continued rapid growth. Brazil’s cryptocurrency market has grown rapidly over the past year, with the country receiving more than $90 billion in digital assets between July 2023 and June 2024, according to Chainalysis. Stablecoins dominate, accounting for 70% of cryptocurrency trades moving from local exchanges to global exchanges.
Many fintech companies and exchanges in Brazil offer USD-backed stablecoin As a store of value option, especially for business-to-business cross-border payments. As a result, market analysts warn that moves by Brazilian authorities could hinder the industry’s progress in the global economy. latin american countries.
especially, Stablecoin They have become a cornerstone of the crypto industry, with a market capitalization of a record $190 billion, according to BeInCrypto.
A public consultation period on the proposal runs until February 28, 2025, allowing stakeholders to share feedback. However, the BCB has the final say on whether these comments will affect the final framework.
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