Central Bank shuts Drex platform, clearing path for stablecoins

Cost, privacy concerns lead to pivot as banks explore their own digital currencies

11/05/2025

Drex’s second phase, launched in October 2024, is expected to conclude with a final report in early 2026
Drex’s second phase, launched in October 2024, is expected to conclude with a final report in early 2026 — Photo: Divulgação/Banco Central

Brazil’s Central Bank has decided to shut down the blockchain-inspired platform used in the first two phases of Drex, its central bank digital currency (CBDC) project. The move signals a major shift in direction, prompted by high maintenance costs and unresolved privacy issues in transaction processing, people familiar with the matter told Valor.

The decision followed a meeting on Tuesday (4) between the Central Bank and private-sector consortia involved in the project. Valor had already reported in August that the Drex platform based on distributed ledger technology (DLT) would not be used in the next stage of development. Discussions for phase three are expected to begin in early 2026.

Experts say the weakening of Drex opens the door to privately issued tokenized assets and stablecoins, which may replace a state-backed CBDC.

Shift to private alternatives

Stablecoins are cryptocurrencies pegged 1:1 to traditional currencies, offering the programmability of digital assets without the need for intermediaries to settle transactions.

Henrique Teixeira, Latin America head of tokenization platform Hamsa, said shutting down Drex is a “cold shower” for those involved in its development but does not mean the end of tokenization in Brazil. “Banks are likely to develop their own stablecoins now,” he said.

In April, Itaú Unibanco said it was exploring the possibility of launching its own stablecoin, pending regulation from the Central Bank, which is expected this month.

Mr. Teixeira pointed to Safra Bank as a model: in September, it issued a dollar-pegged stablecoin to provide clients with exchange rate exposure at lower cost, avoiding Brazil’s financial transactions tax (IOF) and traditional foreign exchange market fees.

Banks could also launch real-pegged stablecoins to settle transactions involving tokenized assets that are currently outside the crypto world, such as debentures, receivables, and investment funds. “Initially, the winners will be those who can move fastest. Larger banks, in the S1 and S2 categories—which include financial institutions with the largest volume of assets and most systemic importance in Brazil—have more resources and expertise, giving them an edge,” he said.

Banking groups back decision

The Brazilian Federation of Banks (FEBRABAN) said in a statement that shutting down the platform reflects the Central Bank’s commitment to “security and stability in the future infrastructure.” The federation added that it remains part of the Drex support group.

The Brazilian Association of Banks (ABBC), which represents smaller institutions, said that even with the current platform shut down, its member banks have the technology to connect their Drex use cases to other networks. ABBC had been testing the tokenization of Bank Credit Notes (CCBs) in the project.

Blockchain provider BBChain, part of ABBC’s Drex consortium, said phase two “fulfilled its purpose” and that the Central Bank recognized the need for further technological evolution. “New market-driven business models may meet requirements without the regulatory constraints of the pilot,” the company said.

Stablecoin trend mirrors global shift

The growing preference for stablecoins over CBDCs aligns with global trends. Shortly after taking office, President Donald Trump signed an executive order banning the creation of a U.S. CBDC and encouraging the use of private stablecoins.

Drex was launched in 2023 with a pilot focused on tokenizing deposits and transactions in federal government bonds. The second phase, launched in October 2024, is expected to conclude with a final report in early 2026. Both phases used a DLT network as the testing platform.

Phase three will continue with business case studies for Drex but on a technology-neutral basis. Privacy solutions tested earlier failed to strike the balance between ensuring transaction confidentiality and maintaining Central Bank oversight. Looking ahead, one of Drex’s goals is to resume tokenization studies to create a settlement environment where the currency is issued by the Central Bank.

The Central Bank did not respond to a request for comment by press time.

*By Gabriel Shinohara and Ricardo Bomfim, Valor — Brasília and São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Trump tariffs boost Klabin’s kraftliner exports amid trade shift

Asian and African buyers turn to Brazil as they diversify suppliers

 

 

11/05/2025 

Amid a turbulent geopolitical landscape, Klabin has gained ground in international markets with its kraftliner paper, used for packaging production. From July to September, exports accounted for 85% of the company’s kraftliner volume, up from 77% a year earlier, supporting its strong quarterly performance.

Part of this growth was expected due to the ramp-up of production at the Puma II project in Ortigueira, Paraná state. But a key driver was also Klabin’s entry into new markets, said Gabriela Woge, the company’s head of corporate finance and investor relation

“We’re expanding mainly in Asia, in countries like China and India, as well as Morocco and other places where Klabin hadn’t operated before,” Ms. Woge said in an interview with Valor.

With the U.S. imposing tariffs, many of these countries have sought to diversify suppliers to reduce reliance on American products, creating opportunities for new players, including Brazil.

Double-digit growth

In the third quarter, Klabin’s total paper volume rose 10% year over year to 375,000 tonnes. Kraftliner alone grew 23%. Net revenue in the paper segment reached R$1.8 billion, up 11% from a year earlier.

Klabin’s packaging business also performed well. Shipments of corrugated board advanced 6.6% in square meters, reaching 456 million m² between July and September, driven by output from the Figueira project. Sales volume grew 5.9% year over year to 250,000 tonnes, with a 13% increase in pricing.

As a result, revenue from the packaging segment climbed 20% to R$1.6 billion. “The company has been using its flexibility to grow in segments that offer greater resilience,” Ms. Woge said. That’s reflected in the rising share of exporters, especially in fruit, protein, and tobacco, in Klabin’s customer base.

The company’s pulp division was the weak spot in the quarter, analysts said. Sales volume rose 25% to 401,000 tonnes, but revenue slipped 3% due to an 8% drop in short-fiber prices.

After months of declines, short-fiber prices in China have recently started to recover, though modestly. Ms. Woge said the company’s diversified portfolio—including long fiber and fluff pulp used in diapers and sanitary products—remains its strength during periods of unfavorable pricing.

*By Helena Benfica, Valor — São Paulo

Source Valor International

https://valorinternational.globo.com/

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Telefónica lists Brazil as one of its priority markets in five-year plan

Spanish group pledges to expand fiber network and boost B2B revenue

11/05/2025 

 

Telefónica’s Brazilian operations are set to play a key role in the Spanish multinational’s new strategic plan, which targets €3 billion in efficiency gains by 2030. The savings goal includes both capital expenditures and operating costs.

As part of its five-year roadmap, Telefónica named Brazil, Spain, the United Kingdom, and Germany as priority markets and outlined specific targets for each country.

“We will grow faster than expected,” Telefónica CEO Marc Murtra said at a meeting with market analysts. In Brazil, the company expects key financial metrics to grow above inflation, said Chief Operating Officer Emilio Gayo.

Mr. Gayo highlighted several efficiency opportunities in Brazil, including the sale of legacy copper networks from the country’s former fixed-line telephone concession, digitalization of services, and the use of new technologies such as artificial intelligence to build and manage networks. Telefônica Brasil, which operates under the Vivo brand, expects to raise R$3 billion from the copper network sale by 2028, as announced in May.

The plan also calls for expanding the convergence rate of its fixed broadband customer base in Brazil, targeting 74% penetration by 2028, six percentage points above the current 68%. In telecom, convergence refers not only to bundling mobile and fixed-line services, but also to offering non-telecom digital services.

Telefónica also aims to grow its business-to-business (B2B) operations in Brazil, increasing the share of digital services in B2B revenue from 38% to 42% by 2028.

The company committed to expanding its fiber-optic network in Brazil, which reached 30.5 million households as of September. It also plans to reduce annual customer churn by 2.5 percentage points, though the current churn rate was not disclosed.

Minority stake sale not on the table

In June, a Spanish news outlet reported that Telefónica was considering selling a 20% stake in Vivo to reduce its debt, which stood at €28.2 billion at the end of September. The report triggered widespread speculation in Brazil.

Asked about the potential sale, Mr. Murtra said the company has other capital allocation options beyond those included in the strategic plan, which focuses on operational simplification to improve efficiency.

“The organic capital allocation strategy is what we’ve outlined,” he said. “It’s true there are other instruments beyond what we mentioned, but in our ‘business as usual’ scenario, we are sticking to the plan.”

Sources told Valor there are no plans to sell a stake in Vivo just to raise cash for the parent company. However, Telefônica Brasil might use its shares as currency in a future merger or acquisition, though no such deal is currently being negotiated.

Brazil stands out

Telefónica’s outlook for Brazil contrasts with its plans elsewhere in Latin America. The company confirmed on Tuesday (4) that it intends to exit all Spanish-speaking markets in the region, including Mexico, Chile, and Venezuela, though no timeline was given. The sale of its Colombian operation is already well underway, Mr. Murtra said.

While the strategic plan does not rely on mergers and acquisitions, Mr. Murtra said consolidation remains an option, especially in Europe, where 38 mobile operators are active.

“There should be European operators with scale comparable to their U.S. and Chinese counterparts,” he said.

Profit rises, dividend cut hits stock

In the third quarter, Telefónica reported net income of €276 million, up from just €3 million a year earlier. Adjusted EBITDA rose 1.2% organically to €3.07 billion, while revenue fell 1.5% to €8.96 billion.

Analysts estimate that consolidation in Telefónica’s core markets—Brazil, Spain, the UK, and Germany—could generate €18 billion to €22 billion in synergies. Those gains could be shared among buyers, sellers, consumers, investors, and innovation projects.

Despite the upbeat projections, Telefónica shares fell 13% on the Madrid stock exchange, following the announcement that dividends would be cut in half in 2026. The company plans to pay €0.15 per share next year, down from €0.30 in 2025.

“We believe in the company’s fundamentals, and that’s what we focused on in the plan,” Mr. Murtra said, adding that the board of directors and core shareholders backed the strategy, including the dividend adjustment.

The reporter traveled at the invitation of Telefônica Brasil.

*By Rodrigo Carro — Madrid

Source: Valor International

https://valorinternational.globo.com/

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Taxation of High Incomes – Impacts on Foreign Capital – Draft Law No. 1087/25. 

Taxation of High Incomes – Impacts on Foreign Capital – Draft Law No. 1087/25. 

By Edmo Colnaghi Neves, Ph.D.

 

 

 

 

Draft Law No. 1087/25, already approved by the Chamber of Deputies and currently under consideration in the Federal Senate, if likewise approved by the latter, will substantially alter the taxation of both high- and low-income brackets in Brazil.

Draft Law has three main objectives:

  1. To establish an income tax exemption for individuals earning up to BRL 5,000.00 per month and to reduce the personal income tax rate (IRPF) for those earning between BRL 5,000.00 and BRL 7,000.00 per month;
  2. To impose a 10% tax rate on individuals earning more than BRL 1,200,000.00 per year, with progressive rates ranging from 0% to 10% for annual income between BRL 600,000.00 and BRL 1,200,000.00, and to require withholding at source for those earning more than BRL 50,000.00 in any given month; and
  3. To levy a 10% tax on profits and dividends remitted abroad.

There are several general and specific aspects to consider for each item; however, the focus here will be on item 2, commonly referred to as the taxation of high incomes.

In addition to the rates mentioned above, it is important to note that the tax base will consist of the sum of all amounts received during the calendar year, including those subject to definitive or exclusive taxation, as well as exempt income or income subject to a zero or reduced rate. Certain capital gains, amounts received by way of donation, advancement of inheritance, or inheritance itself, and certain amounts exclusively taxed at source under Articles 12 and 12-A of Law No. 7,713/88 may be deductible.

If the taxpayer has been subject to the 10% withholding tax in any given month during the calendar year, due to exceeding the monthly threshold of BRL 50,000.00, that amount may be offset against the total tax due in the annual income tax return. Should the withholdings exceed the total annual liability, the taxpayer will be entitled to a refund, as currently occurs.

A key issue concerns accumulated profits up to December 2025, given that the law may come into force as of January 2026. As the Draft Law is still under Senate review, it remains subject to amendments and modifications.

The Draft Law currently provides that profits whose distribution is resolved and properly documented by the shareholders’ decision before the end of 2025 may be paid out over the following three fiscal years—up to 2028—without being subject to taxation. However, this time frame could be challenged if it remains in the final text.

Some proposed amendments go further, suggesting that such profits should be exempt from taxation regardless of when they are paid or whether there is a formal resolution of distribution in 2025 by the shareholders of the paying company. Nonetheless, such proposals are unlikely to pass, as their approval would require the Draft Law to return to the Chamber of Deputies, leaving insufficient time for approval before year-end.

Under Brazilian constitutional tax principles, particularly the principle of anteriority, any law increasing taxes must be enacted in one fiscal year to take effect only in the following fiscal year, except in cases expressly provided for by the Constitution.

While awaiting the Senate’s deliberation and any potential changes, it is advisable for shareholders of companies with accumulated profits to expedite the determination and distribution of such profits, to formally approve and document such decisions in corporate records, and to make the corresponding payments. This is to mitigate exposure to the forthcoming increase in tax burden.

Finally, in light of the constitutional principle of legality, it must be emphasized that the new rules will only become enforceable once the Draft Law is duly approved by both legislative houses, sanctioned by the President of the Republic, and enacted into law.

November 2025

 

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Brazil’s Central Bank tightens capital rules for fintechs

Regulator targets 500 firms and cracks down on shadow accounts used by criminals

 

 

 

11/04/2025 

Brazil’s Central Bank announced a new round of tighter regulations for fintechs on Monday (3), raising capital requirements and cracking down on so-called “shadow accounts” amid rapid growth that has exposed vulnerabilities in the country’s financial and payments systems. The changes are expected to affect up to 500 institutions.

The regulator introduced two key measures. The first increases minimum capital and net worth requirements for regulated institutions, now based on the type of financial activity performed rather than on the institutional classification, whether payment or financial institution. The second targets the termination of irregular “shadow accounts” (known in Portuguese as contas-bolsão).

The move comes after a wave of cyberattacks on Pix, Brazil’s instant payment system, and after police investigations revealed that some fintechs had been used by organized crime groups, including in the so-called Hidden Carbon operation.

Bank and fintech representatives largely welcomed the measures.

Ailton de Aquino, the Central Bank’s head of supervision, said the change “levels the playing field in the national financial system.” He called the move a “clear” signal that innovation and security must go hand in hand. He acknowledged that non-banking institutions would be the most affected.

Capital requirements for payment institutions will increase from the current range of R$1 million to R$9 million to between R$9.2 million and R$32.8 million. For banks, the range will rise from R$7 million–R$77 million to R$56 million–R$96 million, depending on the activities performed. Each additional activity requires additional capital.

The Central Bank estimates that about 500 institutions will need to bolster their capital. Mr. Aquino said these institutions currently face R$5.2 billion in capital requirements, a figure that could rise to R$9.1 billion by January 1, 2028, when the transition period ends.

“I don’t believe a payment institution with an initial capital of R$1 million can meet the demands of technology, auditing, and sound structure,” Mr. Aquino said. He attributed the changes both to the natural evolution of regulation and to recent events. “In recent months, we’ve witnessed unpleasant situations in the national financial system. This is part of an evolutionary process, but also a response.”

He also recalled a recent need to ban institutions from using coworking spaces as their official contact points with the Central Bank. “We had to pass a very curious rule recently: an institution can’t have a coworking space as its contact point with the Central Bank. We reached the absurd point of trying to supervise a payment institution headquartered in a coworking space.”

Mr. Aquino gave the press briefing alongside Gilneu Vivan, the Central Bank’s director of regulation, and Izabela Correa, director of consumer affairs and conduct supervision.

New methodology

The new methodology for calculating minimum capital includes an amount for initial operating costs and, for companies heavily reliant on technology infrastructure, an additional amount to reflect that. Requirements will vary depending on whether the institution performs operational, investment, or funding activities, including issuing credit, receiving deposits, or offering custody services.

An extra R$30 million in capital will be required for institutions that use the word “bank” or similar terms in their branding, in any language, including companies such as Nubank.

Mr. Vivan said the new rules increase investors’ “skin in the game,” encouraging stronger compliance with regulations and internal controls. Institutions will be able to either increase their capital or scale back their activities to reduce their capital requirements.

Those unable to comply, Mr. Aquino said, will need to undergo an “orderly exit,” corporate restructuring, or be absorbed by other firms. He stressed, however, that the rule’s goal is not to shrink the number of institutions under Central Bank supervision but to create fairer competition.

A transition period is in place for current operators and those with pending applications to launch or expand services. Until June 30, 2026, capital and net worth requirements will remain unchanged. After that, the minimums will rise gradually every six months, with full implementation by December 31, 2027.

Crackdown on shadow accounts

The Central Bank also introduced new rules targeting “shadow accounts” that mask financial transactions. Starting December 1, institutions must terminate these accounts if they are used to process payments, receipts, or offsets on behalf of third parties with the intent to obscure or substitute financial obligations. Institutions will be responsible for identifying such irregular use.

Shadow accounts consolidate operations from multiple clients into a single account, commonly used in marketplaces and currency exchange. But the model has been exploited by criminal organizations. In this setup, a fintech holds an account at a bank and creates sub-accounts for end users, making it difficult to trace the money’s origin and destination. This practice has appeared repeatedly in police investigations.

“Obviously lawful services, such as eFX [electronic foreign exchange transfers], are not being targeted,” Ms. Correa said.

In recent months, the Central Bank has rolled out several measures to close security loopholes. It limited TED and Pix transfers by unauthorized payment institutions and shortened the window for unregulated fintechs to operate without a license, from 2029 to May 2026. It is also drafting new rules for banking-as-a-service platforms.

Mr. Aquino said that while higher capital requirements alone may not prevent criminal groups from operating, the bar is now significantly higher for peer-to-peer lending companies (SEPs), direct credit companies (SCPs), and payment institutions, all of which are common structures for fintechs.

*By Gabriel Shinohara and Ruan Amorim — Brasília

Source: Valor International

https://valorinternational.globo.com/

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