Brazil plans to ban algorithmic stablecoins, with violations potentially resulting in up to 8 years of imprisonment.

Techub News reports, according to CoinDesk, the Brazilian Congressional Committee on Innovation and Technology has passed Bill 4.308/2024, prohibiting the issuance or trading of algorithmic stablecoins such as Ethena's USDe and Frax. The new bill requires all stablecoins issued in Brazil to be fully backed by reserve assets. Issuing uncollateralized stablecoins in violation will be considered financial fraud, punishable by up to 8 years in prison. For foreign-issued stablecoins like USDT and USDC, they can only be offered by companies authorized to operate in Brazil, and exchanges must ensure foreign issuers comply with Brazilian regulatory standards.

According to data from Brazilian tax authorities, stablecoins currently account for 90% of the country's cryptocurrency trading volume. The bill still needs approval from multiple committees and deliberation by the Senate before it can officially become law.