Brazil debates whether to treat stablecoins as e-money

Brazil’s Congress held a public hearing in 2024 to examine Bill 4308/2024, which would define how stablecoins are regulated in the country. The session was called by rapporteur Jadyel Alencar to help frame a technical opinion on the measure introduced by Deputy Aureo Ribeiro.

Representatives from the Central Bank, the crypto industry association Abcripto and other stakeholders gave testimony. Lawmakers sought input on how to balance innovation, legal certainty, consumer protection and economic development while avoiding overlapping rules.

Abcripto submitted a technical note arguing that stablecoins should remain classified as digital assets rather than be reclassified as electronic money. The association said designating stablecoins as electronic money could create legal uncertainty and overlap with the rules in Bill 12.865/2013, which cover electronic money products that typically involve custodial holding of customer funds.

The group described common stablecoin practices as a creation-redemption model, where issuers mint and burn tokens linked to reserves instead of acting as custodians of user deposits. Abcripto asked that stablecoins be placed under Central Bank oversight while keeping their legal status as digital assets.

Julia Rosin, president of Abcripto, described the association’s submission at the hearing: “Our contribution seeks to offer technical support for the improvement of the project, preserving legal certainty, innovation, and Brazil’s ability to compete in an increasingly internationalized market, without compromising user protection and adequate regulatory oversight.”

Participants warned that labeling stablecoins as electronic money could shift them into a regulatory regime designed for firms that hold deposits or run payment accounts, potentially triggering additional prudential and operational requirements. Lawmakers asked how creation-redemption mechanics and issuer responsibilities would fit existing electronic money rules or whether new provisions are needed.

A Central Bank representative said the institution sees a need for supervision of stablecoins but did not endorse a specific legal classification during the hearing. The documents and testimony submitted will be used by Congress to draft amendments or set the scope of regulation. The hearing also covered consumer protection, market stability and tax treatment; Abcripto earlier signaled it could pursue legal action if taxation on stablecoin activity were imposed by decree. Bill 4308/2024 remains under review.