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

BlockBeats News, February 5th. According to CoinDesk, the Brazilian National Congress's Science and Technology Innovation Committee has passed a bill to prohibit the issuance or trading of algorithmic stablecoins such as those under Ethena, like USDe and Frax. The new bill requires all stablecoins issued in Brazil to be fully backed by reserve assets, and the issuance of uncollateralized stablecoins will be considered financial fraud, punishable by up to 8 years in prison.

For foreign-issued stablecoins like USDT and USDC, they can only be provided by companies authorized to operate in Brazil, and exchanges must ensure that the foreign issuers comply with Brazilian regulatory standards. According to data from the Brazilian Revenue Service, stablecoins currently represent 90% of the country's cryptocurrency trading volume. The bill still needs approval from multiple committees and review by the Senate to become law.