The Banco Central do Brasil has published a consultation relating to cryptocurrency, cross border payments and foreign exchange. It proposes to ensure that only virtual asset service providers (VASPs) authorized to deal in FX can conduct cryptocurrency transactions for cross border payments and foreign exchange (FX) purposes. Additionally, it plans to ban the transfer of foreign currency stablecoins to domestic self hosted wallets and restrict the use of foreign currency stablecoins for domestic payments.
This self hosted wallet restriction attracted attention from the cryptocurrency community. Stepping back, it appears that the central bank wants to keep tabs on cross border payments. If money can go to self hosted wallets, from there it can be transferred abroad without any reporting.
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