Central bank of Brazil is pushing for increased crypto regulations as stablecoins drive nearly 90% of digital asset transactions in the country.
Gabriel Galipolo, President of Central Bank has expressed concerns that the surge in usage of stablecoin is linked to tax evasion and money laundering.
Stablecoins are increasingly used for everyday payments, especially for international purchases.
Galipolo raised concerns about the lack of transparency, oversight, and tax enforcement associated with the increase in crypto transactions.
The Banco Central do Brasil (BCB) has proposed regulations to ban transfers of foreign-backed stablecoins from exchanges to self-custody wallets. This measure targets "tokens denominated in foreign currencies," which are commonly used for cross-border payments. The public consultation period for this proposal remains open until February 28, 2025.
Galipolo promoted government initiatives like Drex, Brazil's digital currency project, and Pix, an instant payment platform, as preferable alternatives.
The central bank wants to keep tabs on cross border payments. If money can go to self hosted wallets, from there it can be transferred abroad without any reporting.
The initiative from the central bank appears to be an attempt to tackle the potential dollarization of the economy pre-emptively.
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