Brazil’s stablecoin ban could shift users to decentralised platforms

Brazil’s proposed ban on self-custodial stablecoin transfers could further drive decentralisation, according to industry experts.

Banco Central do Brasil (BCB) recently announced a proposal to prevent stablecoin transactions, including Tether’s USDT (CRYPTO:USDT), from being transferred to self-custodial wallets like MetaMask or Trezor.

This proposal comes amid a rise in stablecoin adoption in Brazil, as citizens seek alternatives to protect their wealth from the depreciating Brazilian real.

Carol Souza, co-founder of Area Bitcoin, stated that BCB’s intention is to prevent stablecoin transactions from taking place outside of Brazilian trading platforms.

She noted that crypto exchanges in Brazil have implemented Know Your Customer (KYC) rules since 2019, but peer-to-peer (P2P) transactions are not subject to such regulations.

Souza also suggested that the proposal could be implemented in 2025, highlighting how governments use prohibitions to protect their fiat currencies.

Lucien Bourdon, a Trezor Bitcoin (CRYPTO:BTC) analyst, explained that the ban would be difficult to enforce.

He pointed out that governments can regulate centralised exchanges, but P2P transactions and decentralised platforms are harder to control.

Bourdon believes the ban would mainly affect part of the ecosystem, likely slowing adoption but not halting it.

Users would likely turn to decentralised platforms or P2P solutions, he added.

Souza emphasised that BCB cannot stop people from using their wallets to conduct P2P transactions or from creating new stablecoins.

With stablecoins now being developed on Bitcoin’s layer-2 networks, like USDT on the Liquid network, decentralised options continue to expand.

Trezor’s Bourdon compared Brazil’s potential move to similar actions taken in countries like China and Nigeria, where restrictions led to a shift towards decentralised platforms.