Proposed Regulation in Brazil: No Withdrawals to Self-Custodial Wallets
The Central Bank of Brazil (BCB) has introduced a regulatory proposal that would prohibit centralized exchanges from allowing users to withdraw stablecoins to self-custodial wallets. This move aims to adapt the financial system to digital assets while ensuring the integrity of international capital flows.
Key Points of the Regulatory Proposal:
- Transfer of stablecoins between residents restricted in cases where Brazilian law permits foreign currency payments.
- Part of the crypto regulation bill approved in December 2022, giving BCB authority over crypto industry rules.
- Public consultation open until Feb. 28, 2025, allowing market participants to provide feedback.
Enhancing Legal Certainty and Competition
The proposed rules by the Brazilian central bank are designed to provide legal certainty for businesses and individuals while promoting competition and efficiency in the foreign exchange market. The regulation outlines three core activities for virtual asset service providers operating in the sector:
Core Activities for Virtual Asset Service Providers:
- Facilitating international payments and transfers via crypto.
- Providing exchange or custody services for tokens denominated in Brazilian reais for non-residents.
- Managing transactions involving tokens pegged to foreign currencies.
Moreover, crypto investments, both inbound and outbound, will be subject to the same regulatory standards as traditional investments. External credit, direct foreign investment, and Brazilian capital abroad involving crypto must comply with existing international capital regulations.
Market Insights: Significant Crypto Transactions in Brazil
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) leading with $2.77 billion in transactions by Brazilian crypto investors.
