Brazil’s Superior Court of Justice has issued a new ruling allowing judges to seize cryptocurrencies from individuals with outstanding debts. Judges now have the authority to seize cryptocurrencies from individuals who owe money and are behind on payments, treating digital assets the same way as bank funds for debt collection.

The court’s Third Panel unanimously agreed that crypto, while not legal tender, holds enough value to serve as a payment method and asset reserve. This ruling allows judges to notify crypto exchanges directly to access a debtor’s assets — without prior notice to the debtor.

Minister Ricardo Villas Bôas Cueva, who voted in favor, acknowledged that Brazil still lacks comprehensive crypto regulation but emphasized that digital assets are already legally recognized as “digital representations of value” under certain bills.

While the country’s legal framework is still evolving, Brazil remains a major player in the global crypto scene. According to Chainalysis, it ranks second in Latin America for crypto volume received. Binance’s acquisition of a São Paulo investment firm earlier this year solidified its local presence, with the exchange calling Brazil a leader in regulatory progress.

Still, it’s not all good news. In late 2024, Brazil’s central bank proposed banning stablecoin use in self-custodial wallets — a move seen as controversial amid growing use of U.S. dollar-pegged assets to counter the Brazilian real’s decline. Experts warned such restrictions would only impact centralized exchanges, while peer-to-peer and DeFi platforms would likely remain unaffected.

As Brazil balances crypto innovation with legal control, this latest court decision sends a clear message: owning crypto won’t shield you from financial responsibility.