IMF says Brazil’s crypto cross-border flows now exceed traditional capital flows

Brazil’s crypto-based cross-border flows have continued rising since 2017 and now exceed traditional capital flows, the IMF said in its latest Financial System Stability Assessment, with dollar-linked stablecoins emerging as the main channel for digital-asset activity and international transfers. The fund warned that stablecoin purchases are two to three times more sensitive to global financial stress than portfolio investment or foreign direct investment flows, raising the risk that turbulence or a loss of confidence could spread more quickly through the financial system. The IMF said Brazil’s crypto market is large, fast-growing and increasingly interconnected with banks, payment providers, investment platforms and consumers. It said stablecoins are used for trading, remittances and as a store of dollar-denominated value, but their speed, borderless nature and use across local platforms, offshore exchanges and self-hosted wallets can make capital movements harder for authorities to monitor. Banco Central do Brasil has already tightened parts of the framework. In April, it published Resolution BCB No. 561, which bars the use of digital assets for certain international payment and transfer services by electronic foreign exchange providers, requiring settlement through formal foreign exchange transactions or non-resident Brazilian real accounts. Transitional arrangements allow existing eFX operators to continue while seeking authorization through May 31, 2027. Even so, the IMF said Brazil still needs clearer rules on segregation of client funds, custody, insolvency treatment, the use of customer assets, and anti-money laundering and counter-terrorist financing controls, particularly because many major dollar-linked stablecoins are issued outside the country. Stablecoins are increasingly being integrated into existing payment rails rather than replacing them. Recent commercial initiatives linked Oobit, a Tether-supported payment platform, with Brazil’s Pix system, allowing users to deposit Brazilian currency, hold USDT and transact through Pix. Earlier assessments from Banco Central representatives indicated stablecoins make up about 90% of registered crypto transactions in Brazil. The IMF said the next regulatory phase is likely to focus less on whether stablecoins are allowed and more on how they are issued, held and transferred.