Brazil puts forward limitations on transferring stablecoins to personally owned digital wallets, and considers additional restrictions on cryptocurrency foreign exchange transactions.
The Banco Central do Brasil has published a consultation regarding cryptocurrency, cross-border payments, and foreign exchange, marking a significant step in the regulation of cryptocurrency transactions in Brazil. The proposed measures aim to prevent illicit activities and ensure regulatory compliance in cryptocurrency transactions.
One of the key proposals is the restriction of the use of foreign currency stablecoins for domestic payments. This means that Brazilians will no longer be able to use these digital currencies for domestic transactions. Additionally, the central bank plans to ban the transfer of foreign currency stablecoins to domestic self-hosted wallets. This move has attracted attention from the cryptocurrency community, who express concerns about the potential impact on the privacy and autonomy of cryptocurrency users in Brazil.
The self-hosted wallet restriction is based on the concern that if money can go to self-hosted wallets, it can be transferred abroad without any reporting. This could make it difficult for the central bank to keep tabs on cross-border payments, a goal the bank has expressed in the consultation.
However, the consultation does not apply to domestic cryptocurrency-to-real currency transactions. The central bank authorizes specific Virtual Asset Service Provider (VASP) companies for cryptocurrency transactions related to cross-border payments and foreign exchange settlement. The exact list of these authorized VASPs may vary and is officially published by Banco Central on their regulatory website or official communications.
The consultation proposes that only these authorized VASPs can conduct cryptocurrency transactions for cross-border payments and foreign exchange (FX) purposes. This move is intended to ensure that all cryptocurrency transactions are conducted within a regulated environment, promoting transparency and reducing the risk of illicit activities.
The Banco Central do Brasil's efforts to regulate cryptocurrency transactions are part of a larger effort to maintain financial stability and ensure compliance with international standards. As the use of cryptocurrencies continues to grow, it is expected that more regulations will be introduced to protect consumers and prevent illegal activities.
Stay tuned for updates as the consultation process unfolds and the final regulations are announced.
