Bill accuses Brazil’s central bank of ‘overreach’ in stablecoin rules

A draft proposal submitted to Brazil’s Congress calls for the recently issued stablecoin regulations to be invalidated, arguing that they amount to regulatory overreach by the central bank. The proposal also accuses the bank of effectively creating a new tax by classifying stablecoin movements as equivalent to foreign currency transactions.

New draft law says Brazil’s central bank exceeded its powers with new stablecoin rules

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New rules regarding stablecoins recently issued by Brazil’s central bank have drawn negative reactions as they could affect the adoption of these tools in the country.

A bill introduced in Congress by Congressman Rodrigo Valladares accuses the central bank of overreaching by proposing such sweeping changes and calls for the suspension of these rules.

A reconsideration of stablecoin operations as a foreign currency transaction is at the heart of the draft, as Valadares claims that this innovative consideration is unprecedented. Therefore, this draft states that banks have exceeded their authority in that sense.

The draft also states that if adopted as is, these rules could have a significant economic impact on stablecoin users, potentially resulting in users paying close to 2 billion in financial taxes.

Read more: Brazil issues new cryptocurrency regulations, tightens controls on stablecoin transactions and VASPs

Valadares said:

From a strictly constitutional perspective, these resolutions violate several principles: the principle of legality, the principle of legal certainty, the principle of legality in tax matters, the principle of regulatory proportionality, and the principle of free enterprise.

Why is it relevant?

These rules, which will take effect from February next year, have been criticized by Brazil’s crypto ecosystem, with some arguing that they could have the same effect as a bomb on the current crypto industry.

The draft also warns of the negative impact these new rules will have on VASP activities, stating that these rules are a complete departure from regulations adopted by countries such as Japan and the United States.

“Brazil already faces structural challenges in attracting investment, but it cannot allow administrative measures to create obstacles to competitiveness and further impede the business environment,” the project emphasizes.

I’m looking forward to it

If these rules are ultimately implemented, they could mean a complete change in the way Brazilians use cryptocurrencies and stablecoins, potentially hindering the wider adoption of these assets.

Nevertheless, if Congress supports the new bill, the proposal would be thrown back into the dust, as the central bank would have to reconsider these measures and issue new rules without interfering with the functioning of Congress.

FAQ

• What changes has the Brazilian Central Bank recently proposed to stablecoin regulations?
  The central bank’s new rules classify stablecoin operations as foreign currency transactions, causing a huge backlash from the crypto community.
• What action is Congressman Rodrigo Valadares taking regarding these regulations?
  Valadares has submitted a bill to Congress aimed at suspending the new rules, arguing that the central bank is exceeding its powers.
• What potential economic impact could the new stablecoin rules have?
  If implemented, this rule could expose stablecoin users to the following risks: 2 billion dollars The burden of financial taxes will increase and have a significant impact on transactions.
• What concerns does Mr. Valladares have about the impact of these rules?
  Citing violations of legal principles, he warned that the rules could undermine Brazil’s competitiveness and discourage investment in a market already facing structural challenges.