Brazil's Crypto Exchanges Oppose Central Bank's Stablecoin Ban

In Brazil, the Central Bank's proposal to ban self-custody of stablecoins in digital wallets has met with strong resistance from major crypto exchanges, including Binance. These companies contend that the ban is excessively restrictive and could impede the growth of the crypto sector in the region. Instead of an outright ban, they advocate for a system where users can report their transactions to financial authorities, such as Brazil’s Financial Activities Control Council (Coaf), while maintaining control over their digital assets.

Binance, one of the world's largest crypto brokers, has proposed that reporting potential crimes can help preserve user privacy without undermining the effectiveness of related laws. The company argues that the Central Bank's current proposal is too harsh and could drive businesses to operate outside Brazil, thereby reducing local competition and stifling innovation.

Legal experts have also expressed their opposition to the ban. Cesar Carvalho of Baptista Luz Advogados asserts that the right to control one's own property is protected by Brazilian law. He argues that prohibiting self-custody would violate Brazilian legal principles and democratic values. Carvalho highlights that there are already various tools and regulations in place to prevent illegal activities in the crypto market, such as money laundering prevention measures, the travel rule, and blockchain analysis tools.

Guilherme Sacamone, head of OKEx in Brazil, cautions that stricter regulations could push businesses to expand into countries with more lenient industry controls. He explains that such regulations often burden law-abiding companies, while bad actors continue to operate unchecked. This could result in compliant businesses being punished while offenders evade consequences.

The proposal to add an extra step for sending digital assets to wallets not owned by citizens has also been questioned by some executives. They believe this could alter the way assets are bought and sold by people in different countries. A Brazilian should be able to exchange their money for Bitcoin with anyone in the world at a reasonable price. If wallet transfers are restricted, the basic role of the market and its liquidity may suffer.

Another argument in favor of self-custody is that users can manage their coins outside the control of exchanges. Although it requires more attention, it allows each person to keep their information safe. For this reason, those working in crypto think that self-custody can’t be banned because it’s vital to using cryptocurrencies.

Overall, Brazil’s crypto industry is advocating for regulations that protect people’s money and allow for new developments. A better reporting system in Brazil can guide people toward using the internet safely and responsibly.