A committee in the Brazilian Congress advances bill to ban algorithmic stablecoins

PANews, February 5 – According to CoinDesk, the Brazilian Congress Science, Technology, and Innovation Committee has approved a bill report aimed at banning algorithmic stablecoins. The bill will prohibit the issuance or trading of stablecoins like Ethena’s USDe and Frax that maintain value through algorithms rather than fully backed collateral assets. It requires all stablecoins issued in Brazil to be fully supported by segregated reserve assets.

The bill also increases transparency requirements and classifies the issuance of uncollateralized stablecoins as a new criminal offense, with violators facing up to eight years in prison. For stablecoins issued abroad (such as USDT, USDC), the new regulation requires only companies authorized to operate in Brazil to offer such assets, and trading platforms must verify that their issuers comply with regulations similar to those in Brazil. Otherwise, they must bear the associated risk management responsibilities themselves. The bill still needs to be reviewed by the Brazilian Finance and Taxation Committee and the Constitution, Justice, and Citizen Rights Committee before being submitted to the Senate for final approval.