The Central Bank of Brazil (Banco Central do Brasil, BCB) on November 29 proposed a regulatory draft, planning to ban the transfer of stablecoins (such as Tether's USDT) to self-custody wallets (such as MetaMask, Trezor). The aim is to limit the trading of stablecoins from leaving locally regulated platforms, to avoid the threat of uncontrolled peer-to-peer (P2P) transactions to Brazil's domestic financial stability.
Currently, the use of stablecoins in Brazil is increasing year by year. Due to the continuous depreciation of the Brazilian local currency real, many people see stablecoins as a safe haven against asset depreciation. BCB stated that this proposal plan will end the public consultation in February 2024, and may be implemented as early as 2025.
Are the bans really effective?
However, the industry generally questions the actual effect of this ban. Trezor's Bitcoin analyst Lucien Bourdon said that while the government can regulate centralized exchanges, its control over P2P transactions and decentralized platforms is extremely limited. Bourdon said:
"This ban will only block some novice users from entering the market, but for users familiar with the crypto ecosystem, they can still trade through P2P or decentralized platforms, and may even accelerate the exodus from centralized platforms."
The trend of decentralization is difficult to stop
Industry experts expect that this ban in Brazil may have similar consequences as the policies of countries like China and Nigeria, with users flocking to decentralized solutions.
Area Bitcoin founder Carol Souza said that this restriction not only fails to stop P2P transactions, but may also promote the application of new stablecoin technologies on decentralized platforms, such as Taproot Assets and Liquid Network based on Bitcoin Layer 2. She said:
"The progress of these technologies means that government regulatory measures may backfire, and even accelerate the development of decentralization."
Tether's response: Cooperation is more effective than confrontation
As one of the most influential stablecoin issuers globally, Tether is concerned about the potential impact of this policy. Tether CEO Paolo Ardoino emphasized that Brazil is one of the markets with the highest USDt usage in the Latin American region, and the stability of stablecoins is crucial for consumers in Brazil's volatile economic environment.
He believes that only well-thought-out policies can support Brazil's leadership position in the digital asset field. Ardoino said:
"We are willing to cooperate with the Brazilian authorities to seek a regulatory balance that can protect consumers and promote innovation."
