Brazil Aims to Ban the Issuance of Algorithmic Stablecoins and Requires Foreign Stablecoins to be Provided by a Brazilian-operated Company

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Feb. 5 — CoinDesk reports that Brazil’s National Congress Science and Technology Innovation Committee has passed a bill banning the issuance or trading of algorithmic stablecoins (including Ethena’s USDe and Frax). The new legislation mandates all stablecoins issued in Brazil be fully backed by reserve assets; issuing uncollateralized stablecoins will be classified as financial fraud, punishable by up to 8 years in prison. For foreign-issued stablecoins like USDT and USDC, only firms authorized to operate in Brazil may offer them, and exchanges must verify foreign issuers comply with Brazilian regulatory standards. Per Brazilian Revenue Service data, stablecoins currently account for 90% of the country’s crypto trading volume. The bill still needs approval from multiple committees and Senate review to become law.

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