Brazil Proposes Mandatory 24-Hour Hold on Large Crypto Stablecoin Transactions

Central Bank of Brazil Proposes Holding Stablecoin Remittances For Screening Purposes

The Central Bank of Brazil has recently proposed a new measure that would change the landscape of the regulated use of stablecoins for cross-border payments and remittances.

The institution introduced a notice of rulemaking to implement a 24-hour hold window for remittances and cross-border payments sent using stablecoins and allow virtual asset service providers (VASPs) to complete due diligence procedures on these transactions.

The hold period, applied to stablecoin transactions of over $10,000 in value, would be used by exchanges and service providers to conduct risk analysis of the movements and verify their compatibility with the risk profile of the customer involved, among other elements.

The bank also acknowledged that the holding period would not be absolute and that funds could be released in a shorter timeframe if the intermediating VASP manages to address the risks of the specific transaction before.

“The retention is exclusively precautionary in nature and is intended for risk analysis of the respective operation, not implying the definitive unavailability of assets,” the bank stressed.

If passed, this rule would disincentivize the use of national crypto brokers for these purposes, given that most users tap the alternative stablecoin crypto system for its speed compared to traditional fiat payments.

Nonetheless, the impact on retail users would be minimal due to the high limit proposed. But companies and services tailored to cater to institutions and business-to-business (B2B) use cases would be affected.

This is especially relevant, as a recent report by the Digital Chamber, a U.S.-based cryptocurrency advocacy organization, highlighted that 71% of Latam’s institutions use stablecoins for cross-border payments, becoming the region with the highest adoption rate globally.

Associations and other interested parties will have until July 2 to submit commentary and their views on the implementation of this rule.