Key Takeaways
- With this ruling, Brazilian judges are now permitted to order crypto exchanges to report and block digital assets held by individuals with outstanding debts
- Brazil has yet to implement a fully developed legal framework for crypto
Brazil’s Superior Court of Justice (STJ) has ruled that crypto assets can be frozen to recover unpaid debts, establishing a legal precedent that treats digital currencies similarly to traditional property in debt enforcement cases. The unanimous decision was issued by the court’s Third Panel in response to a creditor’s appeal, after no conventional assets were found under the debtor’s name.
With this ruling, Brazilian judges are now permitted to order crypto exchanges to report and block digital assets held by individuals with outstanding debts. This authority mirrors existing powers that allow courts to freeze bank accounts and seize funds without notifying the debtor, once a creditor’s claim has been validated by the judiciary.
“Although they are not legal tender, crypto assets can be used as a form of payment and as a store of value,” the court stated in its decision. The panel emphasized that while cryptocurrencies lack formal legal status as currency in Brazil, their growing financial significance justifies their inclusion in the country’s debt recovery mechanisms.
The case reflects a broader trend of courts adapting to the expanding role of digital assets in the economy, despite the absence of comprehensive regulation. Brazil has yet to implement a fully developed legal framework for cryptocurrencies. However, bills under consideration in the National Congress refer to digital assets as “a digital representation of value,” a definition that aligns with how courts are beginning to approach them.
Minister Ricardo Villas Bôas Cueva, one of the five judges on the panel, noted that proposed legislation defines digital assets as usable for payments, investments, and access to goods and services through blockchain technology. He also mentioned that the National Council of Justice (CNJ) is currently developing “CriptoJud,” a digital platform intended to facilitate the freezing and seizure of crypto assets by courts directly through exchanges.
The ruling comes amid increasing crypto adoption in Brazil. According to Chainalysis, the country ranks second in Latin America in terms of cryptocurrency value received. Major international exchanges such as Binance have secured licenses to operate locally, signaling institutional growth in the sector.
However, Brazil’s regulatory stance remains inconsistent. In late 2023, the country’s central bank proposed a ban on stablecoin transactions through self-custodial wallets—a measure that drew criticism from crypto users and developers who argue it would disproportionately affect centralized platforms while leaving decentralized systems untouched.
At the same time, traditional financial institutions in Brazil are exploring blockchain-based services. Itaú Unibanco, the country’s largest bank, is reportedly considering the launch of a native stablecoin. Similar interest has been shown by U.S. banks, including Bank of America, which has expressed support for a privately issued, dollar-backed stablecoin, diverging from earlier enthusiasm for central bank digital currencies.
