Brazil Seeks Stronger Monitoring of Stablecoins Transactions

Brazil is experiencing a rapid increase in cryptocurrency usage, with 90% of transactions linked to stablecoins, according to Gabriel Galipolo, president of the Central Bank of Brazil.

Brazil is experiencing a rapid surge in cryptocurrency usage, with 90% of transactions linked to stablecoins, according to Gabriel Galipolo, president of the Central Bank of Brazil. Stablecoins, a type of cryptocurrency pegged to fiat currencies like the U.S. dollar, are gaining popularity as payment tools, presenting both opportunities and challenges for regulators.

During his address at the Bank for International Settlements in Mexico City, Galipolo highlighted the growing prominence of stablecoins in Brazil. He also discussed the Drex initiative, which, contrary to common belief, does not operate as a central bank digital currency (CBDC). Instead, Drex functions as an infrastructure system that aims to improve credit accessibility through asset-based collateral.

The wholesale settlement layer of the Drex system will operate on distributed ledger technology (DLT), while retail users will connect through bank-issued tokenized deposits. The central bank of Brazil announced that Drex underwent operational testing in October 2024. The main goal of this exercise was to test Drex's integration capabilities with both tokenization systems and the decentralized finance model (DeFi). This venture intends to decrease lending expenses by expanding local credit market assurance use.

Galipolo also noted that Brazilians mainly utilize stablecoins for overseas acquisitions. This trend, he said, challenges Brazilian tax enforcement and makes it more difficult to apply anti-money laundering measures. Transactions that take place outside standard financial structures prevent regulators from obtaining clear monitoring of the activities.

Galipolo discussed Brazil's highly promoted instant payment system, Pix, during his presentation. He suggested that Pix be integrated with worldwide instant payment systems to expand its capabilities. The integration of instant payment networks between American territories would deliver faster, quicker, and more efficient cross-border payment flows.

Meanwhile, worldwide interest in stablecoins continues to increase. Thaksin Shinawatra, the former prime minister of Thailand, spoke about recent economic developments in his nation. In his address, Thaksin highlighted that Thailand should establish itself in emerging financial trends like Bitcoin and stablecoins.

Thaksin also stated that the Thai trade sector needs to prepare for economic changes that would result from another presidential term of Donald Trump. Digital assets are transforming the global economy, and Brazil is adjusting its economic systems because of this shift. Stablecoins offer financial advantages, but regulatory oversight and security issues persist in this asset class.