Brazil closes one door to stablecoins

Most countries that have acted on stablecoins this year have been drawing a perimeter around who may issue them. Brazil has done something more specific: it has taken away a job they were already doing.

Under Resolution 561, from 1 October the central bank will not allow virtual assets, stablecoins included, to settle aggregated electronic foreign-exchange flows, CryptoSlate reported. Individual cross-border transfers using them remain permitted, as does the practice of bundling payments together. What is barred is using a token to settle the bundle.

That distinction is the whole rule. A licensed FX provider handling thousands of small remittances nets them into one position and settles once with its counterparty abroad. Doing that leg in a dollar token was fast, cheap and, from the central bank's perspective, invisible: the aggregate left the formal exchange system.

Brazil is not a marginal market for this. Declared stablecoin transactions recorded by the tax authority between 2019 and 2025 total about R$1.13tn, roughly 72% of all declared crypto activity, and close to 80% of declared volume in 2025 alone, with Tether's USDT making up the large majority.

The stated rationale is visibility rather than hostility. The 2022 virtual assets law left genuine ambiguity about where tokens sit in the exchange system, and this resolution answers it in the direction that keeps bulk flows inside the regulated FX perimeter, where the central bank can see and measure them.

The cost lands downstream. Settling through licensed FX transactions instead of tokens means correspondent banking fees, messaging costs and Brazil's financial transaction tax on conversions — expenses that the token leg avoided and that providers will pass to the people sending money.

This is the trade-off every regulator in this area is making and few state plainly. Cheaper flows are harder to observe; observable flows are more expensive. Brazil has chosen observability for the aggregate and left the retail user alone, which is a more careful line than a blanket ban.

The industry response is already visible in strategy rather than protest. Providers are reported to be shifting stablecoin use towards internal treasury and liquidity management rather than the customer-facing rail, building for a world where the token is plumbing inside the firm instead of the settlement asset between firms.

That pattern is familiar from elsewhere. When Singapore's banks netted tokenised deposits on Swift's ledger last week, final settlement still ran through existing systems. Regulators keep arriving at the same arrangement: the new rail may carry the message, the old rail carries finality.

The number to watch is not the volume of declared stablecoin transactions, which will fall by construction. It is whether the flows now excluded from the eFX rail reappear as observable FX transactions, or simply as flows nobody declares.