As part of its efforts to keep up with changes in the financial world, the Brazilian Central Bank (BCB) wants novel regulations on virtual currencies, especially stablecoins. The Central Bank said in a press release on November 29 that a notice of public consultation would be published containing a plan to regulate virtual asset service (VAS) providers. The notice also lists situations that will be affected by international capital rules.
A key tenet of the novel proposal is to prevent centralized exchanges from allowing customers to withdraw stablecoins to self-custodial wallets. This latest development is part of BCB Ban on stablecoin withdrawalswhich is intended to comply with tightening financial regulations.
BCB makes every effort to adapt to changing regulations
In a press release and consultation notice, the central bank will soon restrict transfers of foreign currency stablecoins or tokens between local residents in situations where applicable Brazilian law already allow payments in foreign currency.
In a statement, BCB said the proposal demonstrates its commitment to adapt to changing realities in the digital asset landscape while protecting the integrity of global capital flows.
Under the Crypto Law passed in December 2022, the novel plan allows BCB to monitor the digital currency sector. Interested parties can submit their opinions and views until February 28, 2025.
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The central government remains the final arbiter and enforcer of novel cryptocurrency regulations, even though the public can submit their recommendations. On the central bank’s official website, interested parties can access the full proposal, including guidance for cryptocurrency providers on withdrawal restrictions for stablecoins.
Other things to expect from the novel cryptocurrency offering
Under BCB’s updated proposal, all cryptocurrency investments will be covered by existing regulatory standards that apply to conventional investments. For example, foreign direct investment, external lending and Brazilian cryptocurrency capital must comply with applicable internal capital regulations.
Under the proposal, centralized exchanges must apply for foreign exchange licenses before they can offer stablecoin services.
Stablecoin limits regulating the industry
Stablecoin withdrawal restrictions highlight the growing influence of digital assets. The Tax Service The nation’s (IRS) says stablecoins account for nearly three-quarters of the $4.2 billion in September crypto transactions.
In addition to withdrawal limits, Brazil’s central bank is calling for stricter rules for digital asset companies. By subjecting these companies to investment standards, users will be protected and their activities will be able to comply with international capital rules.
The latest move by the Brazilian central bank underscores the government’s recognition of the importance of digital assets and the need to guarantee financial stability.
Featured image from DALL-E, chart from TradingView
