The Central Bank of Brazil will ban stablecoins and cross-border cryptocurrency payments! What is the reason for banning despite going against international trends?

Brazil’s Central Bank will ban companies from using stablecoins and cryptocurrencies for cross-border settlements starting October 2026 to prevent money laundering. Although the global stablecoin pure payment volume exceeds $550 billion, Brazil remains committed to regulatory boundaries, but retail trading will not be affected.

Brazil to Ban Stablecoins and Cryptocurrencies for Cross-Border Payments

While major countries worldwide recognize the advantages of stablecoins and cryptocurrencies in cross-border payments, Brazil’s central bank announced new regulations stating that, from October 1, 2026, it will officially prohibit electronic foreign exchange providers (eFX) from using stablecoins and cryptocurrencies for overseas remittances.

This ban mainly targets fintech companies and payment firms engaged in cross-border payments, requiring these institutions to conduct transactions with overseas counterparts either through traditional foreign exchange or via non-resident accounts held in Brazil, effectively blocking their use of cryptocurrencies in backend settlement mechanisms.

Unlicensed payment companies must apply for authorization from the central bank before continuing operations by May 31, 2027, and authorized institutions must update their registration systems by October 30, 2026.

However, although corporate cross-border crypto payments are heavily restricted, the Brazilian government has not completely banned cryptocurrencies; retail investors and businesses can still legally buy, sell, hold, and transfer digital assets under existing regulations.

Image source: Central Bank of Brazil announcement Brazil will ban electronic foreign exchange providers from using stablecoins and cryptocurrencies for overseas remittance settlements

Reasons Behind Brazil’s Ban on Cryptocurrency Cross-Border Payments

Why ban companies from using cryptocurrencies for cross-border payments? The Brazilian central bank clearly states that, these new measures aim to improve the traceability of capital flows and strengthen safeguards against illegal financial activities.

Brazil’s Central Bank President Gabriel Galípolo previously stated that, over the past two to three years, cryptocurrency usage in Brazil has surged, with about 90% of trading volume related to stablecoins. As the market size rapidly expands, authorities have decided to tighten regulations to facilitate subsequent tracking and supervision.

In addition to restricting cross-border settlement payments, Brazilian authorities are also pushing broader measures, including reviewing bills to ban unsecured algorithmic stablecoins and promoting a ban on certain prediction markets and derivatives platforms driven by Finance Minister Dario Durigan, indicating that Brazil is actively defining clear operational boundaries for the crypto market.

Expansion of Stablecoin Use, Pure Payments Exceed $8B

While Brazil actively strengthens stablecoin regulation, the application scope of stablecoins worldwide is rapidly expanding.

According to a report by The Block, JPMorgan’s latest analysis indicates that, the usage of stablecoins is growing rapidly, but this does not necessarily translate into proportional growth in total market capitalization.

JPMorgan’s analysis team believes the main reason is the significant increase in the velocity of stablecoin circulation, meaning the same amount of stablecoins are being used more frequently for transactions within a certain period. This higher efficiency limits the potential for overall market cap expansion.

The report mentions that, although consumer-to-consumer (C2C) payments still account for the majority of stablecoin transaction volume, a recent report from venture capital firm a16z Crypto shows that growth in consumer-to-business (C2B) and merchant payments is more pronounced.

Excluding financial transactions such as inter-exchange transfers and institutional vault movements, the pure stablecoin payment volume in 2025 is estimated to be between $350 billion and $550 billion. Geographically, Asia remains the most active region for stablecoin use, contributing nearly two-thirds of the total payment volume.

• **Related report: Stablecoins are not just cross-border—they’re also local! Pure payment volume hits $550 billion, with Asia supporting two-thirds of the transactions

In the context of global innovation trends toward blockchain and stablecoin settlement for cross-border payments, Brazil’s central bank continues to prioritize transparency and the fight against illegal financial activities, ensuring all cross-border fund flows remain fully traceable. This approach aims to modernize the payment system while maintaining strict oversight to prevent money laundering and financial crimes.