Brazil’s Central Bank Pushes for Crypto Regulation Amid Surge in Stablecoin Use

Brazil's central bank president, Gabriel Galipolo, recently spoke at a Bank for International Settlements event in Mexico City, highlighting the surge in cryptocurrency use within the country.

Over the past few years, Brazil has seen a significant increase in crypto transactions, with stablecoins making up approximately 90% of the activity. These digital assets, pegged to stable values like the U.S. dollar, are increasingly being used for everyday purchases and cross-border transactions, unlike their more volatile counterparts.

However, despite the positive growth, Galipolo raised concerns over the challenges of regulating this rapid adoption, especially with stablecoins. The lack of transparency in many of these transactions, particularly regarding taxes and money laundering, complicates regulatory efforts. As more of these transactions occur in retail and international markets, regulators face growing difficulties in enforcing financial oversight.

In response to these challenges, Galipolo pointed to Brazil’s Drex initiative as a potential solution. Though often described as a central bank digital currency, Drex is designed to facilitate credit through collateralized assets. The project aims to lower borrowing costs and improve access to secured financing, areas that have historically been problematic in Brazil. By utilizing distributed ledger technology, Drex will streamline wholesale interbank transactions and enhance efficiency in the lending market.

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Galipolo also highlighted the growing success of Pix, Brazil’s real-time payment system. He suggested that Pix’s programmability could allow it to integrate with global instant payment networks, improving cross-border transactions and reinforcing Brazil’s position as a leader in digital payment infrastructure.

Additionally, the Brazilian central bank’s proposal to ban stablecoin withdrawals to self-custody wallets is still under public consultation until February 2025, raising further concerns about regulatory control over the growing crypto market.

Alexander Zdravkov

Alexander has been working in the crypto industry for three years, during which time he has established himself through his active participation in monitoring market dynamics and technological innovations. His interest in cryptocurrencies and new technologies is not just a professional commitment, but a deep personal passion. He follows the news in the sector daily, analyzes trends, and is excited about every new step in the development of blockchain solutions. His enthusiasm drives him to continuously learn and share knowledge, as he sees the future in digital finance and its role in global transformation.