IMF Says Brazil’s Crypto Market Needs Closer Oversight as Stablecoins Grow

The International Monetary Fund said Brazil’s crypto asset market has expanded rapidly since 2017, with U.S. dollar-pegged stablecoins playing a major role in that growth. The Fund said the country’s cross-border crypto flows are rising faster than traditional capital flows, increasing the need for closer oversight as the market becomes more connected to the wider financial system. According to Cointelegraph, the IMF made the remarks in its Financial System Stability Assessment released Thursday, where it also said stablecoin purchases are two to three times more sensitive to global shocks than traditional portfolio investment or foreign direct investment flows. The report said cross-border crypto flows have “been steadily increasing,” underscoring the scale of Brazil’s expanding digital asset activity and the growing importance of stablecoins within it. The IMF described Brazil’s crypto asset market as large and fast-growing, while noting its increasing interconnection with the traditional financial system.

The IMF said Banco Central do Brasil has already taken steps to regulate crypto asset service providers, but it identified remaining gaps in customer asset protection, stablecoin issuance rules, and anti-money laundering and counter-terrorist financing compliance. The report said these areas will require additional attention as the market develops further. In April, the central bank published Resolution BCB No. 561, which amended rules for electronic foreign exchange providers and prohibited the use of digital assets for certain international payment and transfer services. Under the updated framework, payments and receipts between eFX providers and foreign counterparties must be conducted through foreign exchange transactions or movements in non-resident Brazilian real accounts.