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A Brazilian congressional committee advances a bill to ban algorithmic stablecoins

A Brazilian congressional committee advances a bill to ban algorithmic stablecoins

PANewsPANews2026/02/05 13:22
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PANews, February 5th – According to CoinDesk, the Science, Technology, and Innovation Committee of the Brazilian Congress has approved a bill report aimed at banning algorithmic stablecoins. The bill would prohibit the issuance or trading of stablecoins such as Ethena’s USDe and Frax, which maintain their value through algorithms rather than full collateralization, requiring that all stablecoins issued in Brazil must be fully backed by segregated reserve assets.

The bill also raises 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 and USDC), the new regulations require that only companies authorized to operate in Brazil can offer such assets, and exchanges are responsible for ensuring that issuers comply with regulatory standards similar to those in Brazil; otherwise, they must assume the relevant risk management responsibilities themselves. The bill still needs to be reviewed by the Finance and Taxation Committee and the Constitution, Justice, and Citizenship Committee of Brazil, and then submitted to the Senate before it can become formal law.

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