The Brazilian central bank intends to 'restrict users from withdrawing stablecoins from CEX to personal wallets'; will USDT accelerate the depreciation of the local currency?

The Central Bank of Brazil (BCB) released a public consultation announcement for a cryptocurrency regulation proposal last month. In this proposal, the Brazilian central bank plans to prohibit centralized exchanges (CEX) from allowing users to withdraw stablecoins to self-custody wallets. Additionally, the BCB may ultimately execute the proposal without adopting public opinions. (Background: Brazilian congressman proposes to include 'Bitcoin in national reserves': intends to invest $17.7 billion in BTC) (Supplementary Background: Rush! The first 'Solana Spot ETF' approved by the Brazilian Securities Commission, SOL surges) The Central Bank of Brazil (BCB) announced a cryptocurrency regulation proposal last week and commenced public consultation. In this proposal, the Brazilian central bank plans to restrict centralized exchanges (CEX) from allowing users to withdraw stablecoins to self-custody wallets. According to the public consultation notice, if Brazilian law already permits foreign currency payments, transfers of stablecoins (tokens priced in foreign currencies) between residents will be restricted. The expanded regulatory framework for cryptocurrencies proposed by the Brazilian central bank also outlines three core activities for virtual asset service providers in the foreign exchange market, including: Facilitating international payments and transfers through cryptocurrencies Providing token exchange and custody services priced in Brazilian currency, the real, for non-Brazilian residents Managing token trading linked to foreign currencies Mainly to provide legal certainty for businesses and individuals. At the same time, Brazil has also established regulations for cryptocurrency investments, indicating that cryptocurrency investments will be subject to the same regulatory standards as traditional financial investments. The Brazilian real depreciates to a historic low. However, it is noteworthy that the proposal was made on the eve of the Brazilian real depreciating to a historic low on November 29, when 6 reals could only be exchanged for 1 dollar, marking the lowest level since the real began circulation in 1994, reflecting ongoing market unease regarding Brazil's fiscal discipline. To stabilize the local currency, in addition to this new legislation, the Brazilian government is also attempting to implement multiple policies to soothe market sentiment, including: Reducing public spending by approximately $12 billion from 2025 to 2026; Tax cuts for middle-income citizens and tax increases for the wealthy. The Brazilian stablecoin market is thriving. The author speculates that local residents may prefer the dollar due to the severe fluctuations of the local currency, and stablecoins provide a new exchange channel, which has become a primary reason for the selling pressure on the real. Therefore, the local government hopes to manage stablecoins more clearly through the new legislation while promoting cryptocurrency trading priced in reals. According to statistics released by the Brazilian Revenue Service (RFB) in November, approximately 4.4 million Brazilians utilized cryptocurrencies for transactions amounting to $4.2 billion in September 2023. Among these, stablecoin transfers accounted for 71.4% of the share, approximately $3 billion, primarily using Tether's stablecoin, USDT. The Brazilian central bank may not adopt public opinions for proposal execution. However, it is important to note that although the Brazilian central bank has issued a consultation announcement to the public, allowing opinions to be submitted until February 28, 2025, the central bank can completely disregard public opinions and proceed with regulation according to the document's provisions. Extended reading: USDT dominates 80% of Brazil's cryptocurrency trading volume; Chainalysis: Stablecoins are fleeing US regulations. Related reports: Let 100 million customers use Bitcoin Lightning Network! Brazil's largest online bank Nubank: Significantly promotes cryptocurrency usage in Latin America. BlackRock enters Brazil to issue Bitcoin spot ETF 'IBIT BDR'! Net flow accounts for 42% of the company's total ETF volume. USDT dominates 80% of Brazil's cryptocurrency trading volume; Chainalysis: Stablecoins are fleeing US regulations. 'The Brazilian central bank intends to restrict users from withdrawing stablecoins from CEX to personal wallets; will USDT accelerate the depreciation of the local currency?' This article was first published on BlockTempo (The most influential blockchain news media).