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Coinpaprika 2024-11-30 15:13:23

Brazil Moves to Ban Stablecoin Transfers to Private Wallets

Brazil’s central bank is planning to introduce strict regulations for stablecoins, proposing a ban on transferring foreign-backed tokens to self-custody wallets. This move is part of a broader effort to align cryptocurrency operations with traditional financial regulations and address risks related to investor protection and market stability. The draft proposal, unveiled on November 29, specifically targets stablecoins pegged to foreign currencies. If approved, cryptocurrency exchanges in Brazil would no longer allow users to move these tokens to private wallets. The regulation aims to treat cryptocurrencies similarly to other financial assets like foreign direct investments and international credit, requiring service providers to adhere to global financial rules and share customer information with the central bank. While the central bank acknowledges the potential benefits of virtual assets—such as improving foreign exchange efficiency and expanding investment opportunities—it also highlights risks like cybersecurity threats, illicit activities, and economic instability. These concerns underline the necessity of stricter rules, according to the regulator. Brazil’s crypto market has seen massive growth, with over $90 billion in digital assets traded between July 2023 and June 2024, according to data from Chainalysis. Stablecoins , particularly USD-backed tokens, have played a pivotal role, accounting for 70% of all crypto transactions between domestic and international platforms. These tokens are popular for their stability and are frequently used in cross-border transactions , especially by businesses seeking to preserve value. However, industry analysts warn that this new restriction could hamper Brazil’s thriving crypto sector, which has become a leader in Latin America. Stablecoins are integral to the ecosystem, with the global market cap of these tokens now reaching $190 billion. The public can provide feedback on the proposal until February 28, 2025, though the central bank will have the final say on implementing the rules. Critics argue that while regulation may provide clarity and address risks , such restrictions could limit innovation and growth in the rapidly expanding sector.

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