Brazil’s congress is moving to shut the door on algorithmic stablecoins, advancing a bill that would reshape how the country treats fiat-pegged crypto. Key move: Science, Technology, and Innovation Committee advances Bill 4.308/2024 - The committee approved a report on Bill 4.308/2024 that would ban the issuance and trading of algorithmic stablecoins — tokens that try to keep a peg via code rather than real-world reserves. Targets named in the proposal include Ethena’s USDe and Frax, and the change echoes global concerns following high-profile collapses such as Terra in 2022. What the bill would require - Any stablecoin issued in Brazil must be fully backed by segregated reserve assets. - Issuers would face stronger transparency and reporting obligations. - Issuing unbacked (algorithmic) stablecoins would become a criminal offense, with penalties of up to eight years in prison — signaling a shift toward treating such offerings as potential financial fraud. Rules for foreign stablecoins and exchanges - Foreign-issued stablecoins (e.g., USDT, USDC) could only be offered in Brazil by firms authorized to operate there. - Crypto exchanges would have to verify that overseas issuers meet regulatory standards comparable to Brazil’s; if they fail to do so, exchanges could be held responsible for the resultant risks. Why it matters - Stablecoins account for roughly 90% of crypto trading volume in Brazil, according to the country’s tax authority — so the bill could materially affect market structure, liquidity and how both domestic and international players operate. Next steps - The proposal still needs sign-off from Brazil’s Finance and Taxation Committee and the Constitution, Justice, and Citizenship Committee before heading to the Senate and, potentially, becoming law. If passed, the bill would mark one of the strictest national crackdowns on algorithmic stablecoins, prioritizing reserve backing and legal accountability for issuers and platforms serving Brazilian users. Read more AI-generated news on: undefined/news