The International Monetary Fund (IMF) is urging Brazil to strengthen oversight of its stablecoin market as cross-border cryptocurrency activity continues to grow faster than traditional capital flows.
According to the IMF’s latest Financial System Stability Assessment, Brazil’s crypto market has expanded rapidly since 2017, with U.S. dollar-backed stablecoins becoming a major part of that growth. The organisation believes the increasing connection between crypto markets and Brazil’s financial system means regulators need to pay closer attention to potential risks.
One of the IMF’s main concerns is that stablecoin transactions appear to react more strongly to global financial shocks than traditional forms of investment. Its analysis found that purchases of dollar-backed stablecoins are two to three times more sensitive to international market events than foreign direct investment or portfolio investments. This means periods of global uncertainty could trigger larger and faster movements of capital through crypto markets.
Despite these concerns, the IMF is not calling for a ban on stablecoins. Instead, it recommends strengthening regulations in key areas such as customer asset protection, stablecoin issuance standards, anti-money laundering (AML) measures, and counter-terrorist financing (CFT) compliance.
Brazil has already taken steps to regulate the sector. The country’s central bank, Banco Central do Brasil (BCB), has introduced rules for crypto-asset service providers and recently implemented measures separating cryptocurrency activity from regulated foreign-exchange payment channels.
Under new regulations introduced earlier this year, virtual assets cannot be used to settle transactions within Brazil’s supervised foreign-exchange system. However, crypto trading and stablecoin transfers remain legal outside that framework through exchanges, wallets, and other digital-asset platforms.
The IMF noted that cross-border crypto transactions have been growing at a faster pace than traditional international capital movements. This trend has attracted increasing attention from regulators, particularly because stablecoins now represent a large share of Brazil’s crypto activity.
Brazilian central bank officials have previously estimated that stablecoins account for around 90% of reported crypto flows in the country. Much of this activity is linked to U.S. dollar-pegged tokens, which continue to dominate the market.
At the same time, stablecoins are becoming more integrated into everyday payments. Recent developments have allowed users to connect stablecoins such as USDT with Brazil’s popular Pix instant-payment system, making it easier to move between traditional and digital finance.
The IMF’s message is clear: as stablecoins become more widely used and increasingly connected to the broader financial system, stronger oversight will be needed to manage risks while allowing innovation to continue. The organisation believes a balanced regulatory approach can help Brazil benefit from crypto adoption while protecting financial stability and maintaining confidence in the country’s financial system.
