If these homeowners default on their repayments, Brazilian courts are allowed to freeze owners’ cryptocurrency.
Brazil’s Superior Court of Justice (STJ) has unanimously decided that judges can now notify cryptocurrency exchanges of their intention to seize debtors’ crypto assets to repay outstanding debts. The ruling examined a case put forth by creditors seeking repayment.
In a translated statement published on the STJ website, it was written: “Although they are not legal tender, crypto assets can be used as a means of payment and a store of value.”
Crypto now treated like bank accounts in legal disputes
According to Brazilian law, judges have the authority to freeze bank accounts and authorize fund withdrawals without notifying the debtor. Following the new ruling, similar treatment will now apply to crypto assets, which may be frozen or seized to fulfill legal obligations.
Minister Ricardo VillasBôas Cueva, one of the five panel members, acknowledged that although Brazil still lacks comprehensive regulation of cryptocurrency, some legislative proposals have defined it as “a digital representation of value.”
Despite the regulatory gap, Brazil has become one of the leading countries in Latin America. According to a report by Chainalysis in October, Brazil ranked second in the region in terms of received crypto value, highlighting the country’s increasing involvement with digital assets.
In an apparent move earlier this year, Binance obtained regulatory approval in Brazil after acquiring an investment firm based in São Paulo. At the time, a Binance executive told Cointelegraph that Brazil had made “significant progress” in cryptocurrency regulation and anticipated a comprehensive legal framework to be introduced “by mid-year.”
Stablecoin ban sparks debate in a growing market
Nevertheless, not all developments are favorable for the industry. In December last year, the Central Bank of Brazil proposed a controversial ban on self-custodied wallets, which have become an increasingly popular method for Brazilians to protect their wealth from real devaluation.
Critics argue that such a ban would be difficult to enforce. Trezor analyst Lucien Bourdon stated, “The government can regulate centralized exchanges, but P2P trading and decentralized platforms are hard to control. This means the ban may only affect part of the ecosystem.”
Brazil’s largest bank, Itaú Unibanco, is currently considering launching its own Stablecoin, making it the latest major traditional financial institution to announce such plans.
Local media report that the bank’s decision will depend on the development of Brazil’s regulatory framework and how similar initiatives by major international institutions play out.
This move follows recent announcements from Tradfi institutions regarding plans to launch or develop Stablecoins.
Bank of America signals readiness for stablecoin launch
In the United States, Bank of America CEO Brian Moynihan recently confirmed that the bank is prepared to launch a USD-backed Stablecoin if Congress establishes a clear legal framework.
The announcement places the American lender among an increasing number of systemically important banks planning to enter the Stablecoin industry.
This development comes after former U.S. President Donald Trump’s formal rejection of Central Bank Digital Currency (CBDC) and recognition of Stablecoins, shifting attention from state-issued digital currencies to private sector alternatives.
As Brazil continues its regulatory evolution, the court’s latest ruling reinforces the view of crypto assets as an integral part of the national financial system, even as a broader legal framework remains in development.
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