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

According to CoinDesk, the Brazilian Congress's 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 USDe from Ethena and Frax, which maintain their value through algorithms rather than fully collateralized assets, requiring all stablecoins issued in Brazil to 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 their issuers comply with regulatory standards similar to those in Brazil, or else they must bear the related risk management responsibilities themselves. The bill still needs to be reviewed by Brazil's Finance and Taxation Committee and the Constitution, Justice, and Citizenship Committee before being submitted to the Senate to become formal law.