Brazil Proposes Ban on Algorithmic Stablecoins Including Ethena's USDe, Impacting Crypto Regulation

Brazilian regulatory authorities are advancing a proposal to prohibit algorithmic stablecoins within the country's financial ecosystem. This initiative specifically targets digital assets like Ethena's USDe, which rely on algorithms and derivative contracts rather than direct fiat currency reserves to maintain their peg. The move forms part of a broader regulatory framework for virtual assets, signaling a stricter stance on decentralized finance (DeFi) instruments perceived as carrying higher systemic risk. If enacted, the ban would mandate that all stablecoins offered in Brazil be fully backed by traditional assets held with authorized financial institutions. This development marks a significant shift in Latin America's approach to cryptocurrency regulation and could influence the operational landscape for global stablecoin projects seeking market access in the region.