MetaMask receives USDT may violate the law? The Central Bank of Brazil plans to ban the withdrawal of stablecoins to self-custody wallets

The ban on self-hosted Wallets proposed by Brazil's Stable Coin may trigger an uncontrollable wave of decentralization. Although Brazil's Stable Coin ban aims to control the market, it may actually give rise to a stronger trend of decentralization, accelerating users' departure from regulated platforms. (Previous summary: Brazil's Central Bank proposes to 'restrict users from withdrawing Stable Coins from CEX to personal Wallet', will USDT accelerate the devaluation of local Fiat Currency?) (Background: Brazilian lawmakers propose to 'include BTC in national reserves': plan to invest $17.7 billion to hoard BTC) Brazil's Central Bank (Banco Central do Brasil, BCB) proposed a regulatory draft on November 29th, planning to prohibit the transfer of Stable Coins (such as Tether's USDT) to self-hosted Wallets (such as MetaMask, Trezor). The aim is to restrict Stable Coin transactions from leaving local regulated platforms to avoid uncontrollable peer-to-peer (P2P) transaction threats to Brazil's domestic financial stability. The exchange rate of the Brazilian Real (BRL) against the US dollar has been hitting new lows. Currently, the use of Stable Coins in Brazil is rising year by year. Due to the continuous devaluation of the local Fiat coin Real in Brazil, many people view Stable Coins as a safe haven against asset devaluation. The BCB stated that this proposal is planned to end public consultation in February 2024 and may be implemented as early as 2025. Is the ban really effective? However, the industry generally doubts that the actual effect of this ban is limited. Lucien Bourdon, a BTC analyst at Trezor, said that although the government can regulate centralized exchanges, their control over P2P transactions and decentralized platforms is extremely limited. Bourdon said, 'This ban will only block some newbie users from entering the market, but for users familiar with the encryption ecosystem, they can still trade through P2P or decentralized platforms, and may even accelerate their departure from centralized platforms.' It may be difficult to stop the trend of decentralization. Industry experts expect that this ban in Brazil may have similar consequences as policies in China, Nigeria, and other countries, that is, a large number of users flock to decentralized solutions. Carol Souza, founder of Area Bitcoin, said that such restrictions not only make it difficult to prevent P2P transactions but may also promote the application of new Stable Coin technologies on decentralized platforms, such as Taproot Assets and Liquid Network based on BTC Layer 2. She said, 'The progress of these technologies means that government regulatory measures may have the opposite effect and even accelerate the development of decentralization.' Tether's response: cooperation is more effective than confrontation. As one of the most influential issuers of Stable Coins globally, Tether expresses concerns about the potential impact of this policy. Paolo Ardoino, CEO of Tether, emphasized that Brazil is one of the markets with the highest usage of USDt in Latin America, and the stability of Stable Coins is crucial for consumers in Brazil's turbulent economic environment. He believes that only well-considered policies can support Brazil's leadership position in the digital asset field. Ardoino said, 'We are willing to cooperate with Brazilian authorities to seek a regulatory balance that can protect consumers and promote innovation.' Related reports: Brazil's Central Bank proposes to 'restrict users from withdrawing Stable Coins from CEX to personal Wallet', will USDT accelerate the devaluation of local Fiat Currency? Brazilian lawmakers propose to 'include BTC in national reserves': plan to invest $17.7 billion to hoard BTC Brazil orders nationwide ban on X (Twitter)! Musk angrily denounces trampling on freedom of speech, what happened? <MetaMask accepting USDT may be illegal? Brazil's Central Bank plans to ban withdrawal of Stable Coins to self-hosted Wallet>