Brazil Committee Approves Bill to Ban Algorithmic Stablecoins, Tighten Foreign Issuer Rules

Brazil's Congressional Committee on Science and Technology approved a bill on Feb. 5 that would ban the issuance and trading of algorithmic stablecoins such as Ethena's USDe and Frax, requiring all stablecoins issued in Brazil to be fully backed by reserve assets, CoinDesk reports citing Brazil's tax authority. The proposal classifies issuing uncollateralized stablecoins as financial fraud punishable by up to eight years in prison, while foreign-issued stablecoins like USDT and USDC could be offered only by companies authorized to operate in Brazil, with trading platforms responsible for ensuring issuers meet Brazilian regulatory standards. Data from Brazil's tax agency show stablecoins account for 90% of the country's cryptocurrency trading volume, and the bill must pass several additional committees and Senate review before becoming law.