According to CoinDesk, Brazil's Congressional Committee on Science and Technology Innovation has passed Bill 4.308/2024, banning the issuance or trading of algorithmic stablecoins such as Ethena's USDe and Frax. The new bill requires all stablecoins issued in Brazil to be fully backed by reserve assets. Issuing uncollateralized stablecoins in violation of the rules will be considered financial fraud, with a maximum prison sentence of 8 years. For stablecoins issued abroad, such as USDT and USDC, they can only be provided by companies authorized to operate in Brazil, and transactions must ensure that foreign issuers comply with Brazilian regulatory standards. According to data from Brazil's tax authority, stablecoins currently account for 90% of the country's cryptocurrency trading volume. The bill still needs to be approved by multiple committees and reviewed by the Senate before it can officially become law.
Brazil Proposes Ban on Algorithmic Stablecoins, with Maximum 8-Year Jail for Violations
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Summary
Brazil's Senate Committee on Science and Technology Innovation passed Bill 4.308/2024, which proposes a ban on algorithmic stablecoins such as USDe and Frax. The bill requires all stablecoins issued in Brazil to be 100% backed by reserves, with uncollateralized tokens labeled as financial fraud, punishable by up to 8 years in prison. Foreign stablecoins, including USDT and USDC, may only be offered by authorized firms and must follow local rules. Stablecoins represent 90% of Brazil's crypto trading volume, making the move a major shift for risk-on assets. The bill now moves to other committees and the Senate for final approval.
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