The post Brazil’s Central Bank Proposes New Regulations on Foreign-Backed Stablecoins, Impacting Crypto Withdrawals appeared on BitcoinEthereumNews.com.

Brazil’s Central Bank is instituting new regulations that could restrict withdrawals of foreign-backed stablecoins to self-custody wallets. The initiative aims to align crypto operations with traditional financial regulations while addressing risks related to investor protection. Analysts warn that the move could hinder Brazil’s thriving crypto sector, where stablecoins dominate cross-border transactions. Brazil’s Central Bank proposes a ban on stablecoin withdrawals to self-custody wallets, affecting the crypto sector’s rapid growth and cross-border transactions. Brazil Aims to Regulate Crypto With New Stablecoin Restrictions The regulatory draft, announced on November 29, specifically targets “tokens denominated in foreign currencies.” Under the proposal, crypto exchanges in Brazil would no longer be allowed to facilitate the transfer of these stablecoins to self-custody wallets. “The provider of virtual asset services is prohibited from transferring virtual assets denominated in foreign currency to a self-custodial portfolio,” the proposal stated. Further, the proposal seeks to align the treatment of crypto with existing financial instruments like foreign direct investments and external credit. Virtual asset service providers would be required to comply with international financial regulations and report client information to the central bank. The BCB highlights the potential benefits of virtual assets, including enhanced efficiency in foreign exchange services and investment options. However, the institution also notes risks such as investor protection, cybersecurity, and financial stability. “The adoption of [virtual assets] also raises concerns, including in cases of interconnection with traditional models, involving aspects such as consumer and investor protection, privacy, cybersecurity, prevention of use for illicit purposes, financial and market integrity, and maintenance of fiscal and macroeconomic stability,” the regulator opined. Considering this, the BCB believes its measures will bring legal clarity for businesses handling international crypto payments and foreign currency-backed digital assets. This regulatory step comes as Brazil’s crypto market continues its rapid growth. Over the past year, Brazil’s…

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Filed under: News - @ November 30, 2024 1:26 pm