Brazil Tightens Crypto Rules as Congress Advances Stablecoin Ban

TLDR

• Brazil committee backs bill to outlaw algorithmic stablecoins nationwide
• New framework demands full reserves and segregated stablecoin backing
• Issuing unbacked stablecoins could bring prison terms up to 8 years
• Foreign stablecoin issuers face tough compliance checks in Brazil
• Lawmakers move Brazil toward fully collateralized crypto standards

Brazil moved forward with a sweeping regulatory shift as lawmakers advanced a bill that targets algorithmic stablecoin models. The measure seeks to redefine how the country supervises fiat-linked tokens and reshape local market standards. The step also positions Brazil as a leading jurisdiction pushing strict stablecoin oversight.

Congress Advances Framework to Outlaw Algorithmic Stablecoins

The Science, Technology, and Innovation Committee approved Bill 4.308/2024 and pushed Brazil toward banning algorithmic stablecoin designs. The report states that tokens holding value through code cannot operate under domestic rules, and the language sets firm boundaries. The bill forces any local issuer to adopt fully collateralized structures and maintain segregated reserves.

The legislation follows global concern about unbacked stablecoin systems, and it reflects lessons from past sector failures. Brazil’s policymakers continue to highlight risks linked to synthetic pegs, and they argue for clearer protections. The proposal also introduces a criminal offense for issuing unbacked stablecoin products, with prison terms reaching eight years.

The bill aims to enhance market integrity as stablecoin usage dominates Brazil’s crypto activity. Tax data show these tokens represent most reported transaction volumes, and the pattern strengthens the urgency for regulation. Lawmakers intend to align local standards with global prudential frameworks.

Foreign Stablecoins Face New Oversight Requirements

The bill sets strict conditions for offering foreign stablecoin products in Brazil. Local platforms must verify that offshore issuers follow rules similar to Brazil’s, and the responsibility transfers if checks fail. This approach increases accountability across distribution channels.

The framework also ties to broader enforcement plans targeting cross-border financial flows and digital asset reporting. Authorities recently expanded discussions on applying existing taxes to crypto activity, and stablecoin operations remain central to those assessments. The proposal strengthens that direction and pushes the market toward formal compliance.

Exchanges operating in Brazil must adjust systems to satisfy due-diligence standards and confirm issuer disclosures.They must manage additional risk if foreign issuers decline to meet new oversight rules. These requirements mark a structural shift toward supervised stablecoin pipelines.

Market Context as Regulatory Changes Progress

The legislative push arrives during active trading across major digital assets. Bitcoin trades near $71,392 within a wide daily range, and volume remains elevated. Ethereum moves around $2,114 as turnover holds firm across derivatives and spot markets.

Solana trades near $91.48 while market participants reassess liquidity conditions across several networks. The broader environment reflects shifting sentiment as regions tighten rulemaking. Brazil’s approach to stablecoin regulation therefore adds pressure on issuers using code-based stabilization.

The bill now moves to the Finance and Taxation and the Constitution, Justice, and Citizenship committees. These reviews determine whether the proposal proceeds to the Senate, and they shape the final regulatory framework. Brazil continues advancing toward a fully collateralized stablecoin model as oversight expands.

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