Brazil is about to transform the issuance of an unbacked stablecoin into a crime, with a penalty of up to eight years in prison. The rule is in Article 13-A of the substitute bill of PL 4.308/2024, the "stablecoins bill", and the detail that deserves attention is who it catches by the skin of its teeth: not just pyramid schemes disguised as currency, but also USDe, from Ethena — a "synthetic dollar" worth nearly US$ 6 billion that, contrary to common belief, does have collateral behind each unit.
That is the crux of the matter. Article 13-A draws a line — on one side, stablecoins backed by reserves; on the other, everything that maintains value through "algorithmic mechanism or derivatives hedge, without corresponding reserves". And it is a line that puts two very different animals in the same bag: the phantom currency that collapses out of nowhere and the synthetically engineered dollar that survived the volatility of 2026. The question Brazil is answering, without saying it out loud, is which stablecoin model it accepts existing in its territory. The answer: only the boring one.
What 13-A prohibits, in practice
PL 4.308/2024, authored by deputy Aureo Ribeiro (Solidariedade-RJ) and with the rapporteurship of deputy Lucas Ramos (PSB-PE), does not create a law from scratch — it amends the Legal Framework for Virtual Assets (Law 14.478/2022). The substitute has already passed through the Commission on Science, Technology and Innovation (CCTI) and, as it is proceeding on a conclusive basis, still needs the Commissions on Finance and Taxation and on Constitution and Justice before proceeding to the Senate.
The pillars of what was approved:
- Prohibition of algorithmic stablecoin — it is prohibited to issue, offer, distribute or list an asset that seeks to maintain a reference value exclusively through algorithmic mechanism or derivatives hedge, without corresponding reserves.
- Mandatory full backing — every stablecoin must be fully covered by segregated reserve assets.
- Asset segregation — client funds are kept separate from the issuer's liabilities, shielded from its creditors in case of bankruptcy.
- New criminal type — issuing an unbacked token becomes a crime, with a penalty of up to eight years in prison.
- Foreign stablecoins — USDT and USDC can circulate, but must meet the Brazilian standard, and the responsibility for risk management falls on the exchanges that list them.
It is the legislative layer of a siege that the Central Bank had already been mounting by resolution — from Resolution 561, which removed crypto from international payments settlement, to Resolution 521, which put self-custodial wallets on the exchange rate radar. PL 4.308 closes the flank that the resolution does not reach: the very definition of what is a legal stablecoin.
Why Ethena is the target — and why it is not Terra
To understand the controversy, you need to know how USDe works, because it is not a common stablecoin. Ethena effectively runs an on-chain hedge fund. For every dollar of USDe issued, the protocol sets up two opposite sides: a long position in spot crypto as collateral (mainly BTC, ETH and ETH in staking), custodied outside exchanges, and a short position of equal size in perpetual futures on exchanges like Binance, Bybit and OKX. This is the so-called delta-neutral structure: if ETH falls 50%, the collateral loses value, but the short gains the equivalent, and total backing remains stable.
The yield — distributed in the staking version, sUSDe — comes from three sources: the funding rate of perpetuals, Ethereum staking yield, and interest on liquid stablecoins in cash, including exposure to tokenized treasury via BUIDL. In March 2026, USDe had approximately US$ 5.9 billion in circulation, with sUSDe close to US$ 2.8 billion.
Here is the point that the Brazilian debate overlooks: USDe is collateralized. It is not TerraUSD. UST, which evaporated more than US$ 40 billion in May 2022 and became the founding trauma of all stablecoin regulation worldwide, was uncollateralized — it maintained parity through a seigniorage game with the LUNA token, with no real asset behind it. When confidence broke, the death spiral was instantaneous. USDe has real collateral; what it does not have is a 1:1 reserve in cash or treasury. It depends on a derivatives position working as expected — which brings real risks (negative funding rate, counterparty risk from exchanges, custody), but is a different animal from a scheme with no backing whatsoever.
Article 13-A, by writing "or derivatives hedge, without corresponding reserves", throws both in the same ditch — along with Frax, AMPL (Ampleforth) and RAI (Reflexer). For the legislator, the distinction between "uncollateralized" and "collateralized but hedged" is a technical detail. For the market, it is the difference between banning a scam and banning a financial product.
Prudence or a net cast too wide?
There is a strong argument in favor of the rule. The average Brazilian does not distinguish a delta-neutral structure from algorithmic seigniorage — and, from the retail consumer's perspective, "yields on its own and maintains US$ 1" sounds the same in either one. The protection is legitimate: the history of exotic stablecoins is a graveyard, and the memory of Terra does not let the regulator want to discover, in practice, if USDe can withstand a funding black swan.
But there is a cost. Brazil is choosing to exit entirely from the synthetic dollar experiment — including the part that worked. And it exposes a conceptual inconsistency: the law requires "reserve assets", but does not rigorously define what counts as quality reserves. It is worth remembering that the world's largest backed stablecoin, USDT, has been migrating its reserves to gold and even to the control of agribusiness companies. "Fully backed" is not synonymous with "risk-free" — and the law treats reserves as if it were.
In the end, Article 13-A is less a technical rule and more a declaration of regulatory taste: Brazil prefers boring, conservative and auditable stablecoins to financial innovation that it cannot (or does not want to) supervise. It is a defensible choice — but it is a choice, not neutrality.
The other side of the coin: Article 13-E
Article 13-A does not stand alone. The same bill brings Article 13-E, which unlocks yield pass-through for real stablecoins — and together the two reveal the complete strategy. On one side, Article 13-A bans foreign synthetic dollars and algorithmic ones. On the other, Article 13-E enables domestic digital real, backed and regulated, to pay yield to the holder. With the Selic at double-digit levels, this is decisive: it is what allows a tokenized real to compete with USDT and USDC.
Read together, PL 4.308 is industrial policy for digital currency: restricts the imported synthetic and rewards the backed national. Not by chance, it speaks directly to the tokenized real that B3 began to build after Drex sank. The stablecoin that Brazil wants to exist is full, segregated, auditable and Brazilian.
For the Brazilian market
Three concrete implications. First: anyone holding USDe or sUSDe on a Brazilian exchange should keep an eye out. If the text becomes law as written, risk responsibility goes to the exchange, and the natural path is the delisting of assets classified as algorithmic — not by collapse, but by legal classification.
Second: the signal to the sector is clear. Brazil enters the club — alongside the global dispute between USDT and USDC and the regulatory race launched by Argentina — of jurisdictions that choose the full reserve model as standard. Those who want to operate here adapt to this mold.
Third: the era of stablecoin as infrastructure has reached Congress. What was a matter of trading desk conversation is now a criminal statute. For issuers and investors, regulatory risk ceased to be hypothesis and became legislative schedule with dates in committees.
The ON3X perspective
Three takeaways from this movement:
- The line Brazil drew is about trust, not technology. Banning derivatives hedge together with algorithmic seigniorage conflates product risk with fraud risk. It is a choice for auditable simplicity — the prudence is understandable, but the price is giving up an entire class of instruments, including the one that did not break.
- "Backed" needs a definition, not an adjective. While the law criminalizes lack of reserves, the world's largest stablecoin redefines what a reserve is — swapping treasury for gold and farmland. Without a standard for backing quality, Article 13-A protects against obvious collapse and ignores the silent risk of concentration.
- 13-A and 13-E are the same policy seen from two angles. One closes the door on synthetic dollars; the other opens it to backed real with yield. Together, they draw the country's bet: a digital national currency, boring and full, against imported financial engineering. Brazil is not just regulating stablecoins — it is choosing which one it wants to win.
Frequently asked questions
What does Article 13-A of PL 4.308 prohibit?
It prohibits issuing, offering, distributing or listing stablecoins that maintain the reference value through algorithmic mechanism or derivatives hedge without corresponding reserves. It requires full backing and asset segregation, and creates a crime — with a penalty of up to eight years in prison — for issuing unbacked tokens. It affects assets such as USDe (Ethena), Frax, AMPL and RAI.
Is Ethena's USDe an algorithmic stablecoin?
Technically, not in the sense of TerraUSD. USDe is collateralized by spot crypto (BTC, ETH) combined with short positions in perpetual futures — a delta-neutral structure. It has real collateral, but does not maintain a 1:1 reserve in cash or treasury; it depends on a derivatives position. The wording of Article 13-A, by citing "derivatives hedge without corresponding reserves", classifies it as prohibited.
Why will issuing unbacked stablecoins become a crime in Brazil?
The memory of the TerraUSD collapse in 2022, which evaporated more than US$ 40 billion, is the trauma that motivates the rule. The goal is to protect retail consumers from stablecoins that promise parity without real reserves behind them, avoiding a "death spiral" on Brazilian soil.
Will USDT and USDC be prohibited by PL 4.308?
No. Since they are backed by reserves, they can continue to circulate, but must meet the Brazilian standard, and risk management responsibility shifts to the exchanges that list them.
What stage is PL 4.308/2024 at?
The substitute has already been approved by the Chamber's Commission on Science, Technology and Innovation. As it is proceeding on a conclusive basis, it will still be analyzed by the Commissions on Finance and Taxation and on Constitution and Justice before possibly proceeding to the Senate.