Brazil stablecoins face IMF scrutiny as crypto flows outpace capital

IMF has called for closer oversight of Brazil’s stablecoin market as cross-border crypto flows outpace traditional capital movements. Summary The IMF has urged Brazil to strengthen oversight of stablecoins as cross border crypto flows continue to grow faster than traditional capital movements. The fund said Brazil’s crypto market has become more connected with the financial system while gaps remain in stablecoin rules, customer protection and AML compliance. IMF analysis found stablecoin purchases are two to three times more sensitive to global shocks than portfolio investment and foreign direct investment. Brazil already bars virtual assets from settling payments through regulated foreign exchange channels while allowing crypto trading and stablecoin use outside that framework. Dollar backed stablecoins continue to account for a large share of Brazil’s crypto activity even as regulators tighten oversight of the sector. According to the International Monetary Fund’s (IMF) latest Financial System Stability Assessment, Brazil’s crypto asset market has expanded rapidly since 2017, with U.S. dollar-pegged stablecoins becoming a major part of that growth. The report says cross-border cr...