Tom Duff Gordon, Coinbase VP, stated that the worries about stablecoin usage for illicit purposes in Brazil can be handled differently, in ways that do not hamper adoption and without affecting users that leverage these assets for their operations.
Coinbase Criticizes Stablecoin Regulation in Brazil, Offers Alternatives
Coinbase, one of the powerhouses of the cryptocurrency industry, has criticized an upcoming regulation that would hinder the use of stablecoins in Brazil. Tom Duff Gordon, Coinbase VP, praised the central bank’s openness in asking for consultation before executing such measures but criticized the reach of such a proposal, that would affect the capacity of dealing with stablecoins in the country.
Specifically, the central bank would outlaw the withdrawal of stablecoins to self-hosted wallets, led by worries about their possible use for money laundering and tax evasion purposes.
Remarking on the effect the presented measures would bring to the market, Gordon stated:
I think the Central Bank could reconsider this issue. Stablecoins will be fundamental to the development of the future internet and decentralized finance, and self-custodial wallets play an essential role in this ecosystem.
Furthermore, the executive remarked that, as part of the public consultation before the upcoming adoption of these measures, it had presented alternatives to this prohibition that would address the bank’s concerns. “In our response to the BC’s public consultation, we presented arguments on how this model can be implemented safely, addressing legitimate concerns about AML (anti-money laundering) and KYC (know your customer) practices,” he stressed.
Brazilian authorities put their sights on the rise of the stablecoins market, and the increase in their usage for remittances last year, floating a proposal to tax these activities.
This led to the proposal of banning withdrawals to self-custody wallets to better account for possible outflows since tracking the movements of these wallets would be unfeasible.
This could potentially criminalize decentralized finance applications, given that most of them rely on stablecoins as part of their yield-staking proposals, hindering the lawful use of these tools for Brazilians.
