Brazil Central Bank proposes stablecoin withdrawal ban

The Brazil Central Bank (BCB) is looking to tighten regulations on virtual currencies, especially stablecoins, through a new proposal.

The central bank announced on November 29 that a public consultation would be held to outline a plan for regulating virtual asset service providers (VASs) and addressing international capital regulations.

A key aspect of the proposal is the ban on centralised exchanges allowing customers to withdraw stablecoins to self-custodial wallets.

This rule is part of a broader effort to comply with changing financial regulations in Brazil.

In its official statement, the BCB emphasised that the proposal aims to ensure the protection of global capital flows while aligning with evolving digital asset regulations.

The consultation notice also pointed out that stablecoin transfers between locals would be restricted, particularly in cases where Brazilian laws already allow payments in foreign currencies.

The BCB has indicated that this move reflects its commitment to staying in line with global financial regulations while adapting to the dynamic nature of the cryptocurrency market.

The proposal, which is part of Brazil's crypto law passed in December 2022, will be open for public comment until February 28, 2025.

The central government will be the final authority in enforcing these regulations, although the public is encouraged to offer input.

Interested parties can review the full proposal on the BCB’s official website.

Under the new proposal, cryptocurrency investments will also need to adhere to existing regulatory standards that apply to traditional investments.

Centralised exchanges will be required to obtain foreign exchange licenses before offering stablecoin-related services.