Brazil’s central bank has introduced a proposal that would require crypto service providers to hold large stablecoin transactions for up to 24 hours before releasing funds, aiming to strengthen anti-money laundering and counter-terrorism financing measures. The proposed regulation, detailed in a public consultation, targets transactions exceeding a certain threshold, which the bank has yet to specify, but is expected to cover institutional and high-net-worth transfers. Under the plan, service providers would have to conduct enhanced due diligence during the review period, including verifying the source of funds and the identities of parties involved.
The move is likely to attract attention from major crypto industry players such as MicroStrategy Inc. (NASDAQ: MSTR), as it could set a precedent for other jurisdictions. According to the proposal, the mandatory holding period would apply to stablecoins pegged to fiat currencies, given their increasing use in cross-border payments and large-value settlements. The central bank stated that the measure is necessary to mitigate risks of illicit activities, citing the pseudo-anonymous nature of blockchain transactions and the rapid movement of funds across borders.
Brazil has been proactive in regulating the crypto sector, having passed a comprehensive legal framework for virtual assets in 2022. The central bank, which oversees the licensing of crypto service providers, has emphasized the need for robust compliance mechanisms. If approved, the regulation would add to existing requirements such as registration with the tax authority and reporting of suspicious transactions.
The proposal has sparked debate among industry stakeholders. Some argue that the 24-hour delay could impede the efficiency of legitimate transactions, particularly for businesses relying on fast settlements. Others welcome the clarity it provides, noting that clear rules can foster institutional adoption. The public consultation period will allow feedback before the final rule is enacted.
This development underscores the growing regulatory scrutiny of stablecoins globally. The International Monetary Fund and the Financial Stability Board have called for stricter oversight of stablecoin arrangements to address financial stability risks. Brazil’s approach could serve as a model for other emerging economies seeking to balance innovation with consumer protection and financial integrity.
