IMF Warns Brazil’s Stablecoin Boom Could Shake Its Economy

Brazil’s stablecoin market has become the largest in Latin America, but its rapid growth is starting to worry global regulators. The IMF says stablecoin flows are growing three times faster than traditional capital flows.

With dollar-pegged tokens making up nearly 89% of reported crypto volume, the IMF is warning that global market shocks could hit Brazil faster.

Stablecoins Are Changing Brazil’s Capital Flows

The IMF said Brazil’s crypto market has expanded rapidly since 2017, with stablecoins playing a major role in that growth. The IMF found that stablecoin purchases are two to three times more sensitive to global market shocks than traditional foreign investment.

That means money can move into or out of Brazil’s stablecoin market much faster when global markets turn volatile.

Dollar-pegged tokens also make up nearly 88.7% of Brazil’s reported crypto trading volume, with the market processing around $6 billion to $8 billion each month.

The growth is also visible in transaction numbers. 

Brazil recorded 185.7 million stablecoin buy and sell transactions, compared with almost none in 2019. Activity picked up sharply from 2024, with 18.2 million transactions in November 2024 alone.

Businesses In Brazil Using Stablecoin Too

Businesses are using dollar-pegged tokens to manage currency risks and make cross-border transfers easier, while retail users are turning to them as a way to protect against local currency swings.

Brazil’s popular Pix payment system has also helped. With millions already used to instant digital payments, moving to crypto wallets and stablecoins requires a much smaller learning curve.

IMF Flags Gaps Despite Brazil’s Crypto Rules

The IMF said Brazil’s central bank has already taken important steps to control the growing market.

However, it warned that gaps remain around customer asset protection, stablecoin issuance and anti-money laundering (AML) and counter-terrorist financing (CFT) rules.

The IMF described Brazil’s crypto market as “large and fast-growing” and increasingly connected to the traditional financial system.

That connection is now becoming a bigger concern for regulators as stablecoin flows grow.

Brazil Tightens Stablecoin Rules

The Banco Central do Brasil has already started tightening its rules. In April, Resolution BCB No. 561 restricted electronic foreign exchange providers from using digital assets for certain international payments and transfers. Cross-border transactions must instead use standard foreign exchange channels or non-resident Brazilian real accounts.

The move shows Brazil is not looking to ban stablecoins outright. Instead, regulators are trying to keep growing crypto activity within the formal financial system.

Meanwhile, if stablecoin flows continue growing faster than traditional capital flows, global market shocks could reach Brazil’s financial system much faster.