On December 2, 2024, Brazil's central bank, Banco Central do Brasil (BCB), proposed a ban on stablecoin withdrawals to self-custodial wallets as the Brazilian real hit an all-time low against the US dollar. The proposal, part of draft regulations, is open for public consultation until February 28, 2025.
The BCB's initiative aims to enhance oversight of the foreign exchange market and regulate capital outflows. Under the draft, virtual asset service providers (VASPs) would be prohibited from transferring foreign-denominated virtual assets to self-custodial wallets. The proposed rules require VASPs to provide detailed client information and transaction values to the BCB.
This move comes as the Brazilian real has depreciated by 23% against the US dollar since January 1, reaching a record exchange rate of 6.09 reals per dollar. The local cryptocurrency community has increasingly turned to stablecoins like Tether's USDt as a hedge against the real's decline, with Brazil reporting $90 billion in crypto inflows over the past year, second only to Argentina.