The country’s central bank, Banco Central do Brasil (BCB), has suggested banning stablecoin transfers to self-custodial wallets like MetaMask.
This means users might not be able to move their stablecoins, like Tether (USDT), to wallets they control.
What’s the Big Idea?
On November 29th, BCB shared a draft regulation to limit how stablecoins can be used. The proposal is open for public feedback until February 28, 2025, but if approved, it could make waves in Brazil’s massive stablecoin market—the second largest in the world.
The goal? The government aims to tighten oversight of the foreign exchange market and track Brazilian money sent overseas more closely. As the Brazilian real weakens against the U.S. dollar, officials aim to supervise the use of stablecoins, which are often tied to the dollar.
Brazil’s central bank proposes to ban platforms from sending stablecoins to self-custody.
“Virtual asset service providers are prohibited from transmitting virtual assets denominated in foreign currency to a self-custodied wallet”.
They’re closing the exits while BRL is… pic.twitter.com/llDiQbwaCP
— Carol Souza (@carol_bitcoin) November 29, 2024
BCB’s document makes it clear: “The provider of virtual asset services is prohibited from transferring virtual assets denominated in foreign currency to a self-custodial portfolio.” In other words, businesses like crypto exchanges wouldn’t be allowed to process withdrawals to private wallets.
More Oversight on the Way
This isn’t just about banning wallet withdrawals. The central bank wants to update older rules about virtual assets and include crypto in its foreign exchange market regulations. The changes would expand the scope of crypto-related activities like payments, sales, and custody.
Brazil Proposes Ban on Stablecoin Transfers to Self-Custody Wallets 🚨🇧🇷
The fact is that 70% of Brazil’s crypto transactions are in stablecoins, a clear sign that Brazilians are turning to USD-backed assets to escape the weakening real!
Now they want to force funds to stay in… pic.twitter.com/mbvPyHK3tJ
— Jana (@TheJanaNFT) December 2, 2024
Finally, under the new rules, virtual asset service providers (VASPs) would need to share detailed information with BCB. It requires providers to verify users, report transfer amounts, and share other key details. The central bank believes this will help them stay on top of things in the fast-growing crypto space.
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