The Federal Revenue Service of Brazil, commonly known as Receita Federal (RFB), will begin collecting information from foreign cryptocurrency exchanges to ensure compliance with local regulations.
RFB aims to understand how these exchanges interact with local service providers and whether they comply with the regulatory requirements established in 2019.
Deputy Secretary of Inspection Andrea Chaves emphasized the tax authority’s concerns about potential illegal activities and stressed the need for foreign cryptocurrency exchanges to provide the necessary details. RFB is striving to gather data to ensure that Brazilian citizens’ assets in the form of cryptocurrencies are fully taxed.
The tax authority is expected to issue a decree requiring foreign exchanges to provide information. This move aims to address the imbalance where Brazilian exchanges must report transactions, while foreign entities currently do not.
There has been a significant increase in cryptocurrency activity in Brazil. In the first half of 2023, tax filers declared 133.6 billion reals ($24.6 billion) in cryptocurrencies, including 14.5 billion reals ($2.7 billion) on foreign exchanges, representing growth rates of 36.6% and 51.2% in each category compared to the first half of 2022. This growth highlights the importance of regulatory oversight as the market expands.
Recent data from Kaiko Research’s study indicates Brazil’s increasing prominence in the global cryptocurrency market. The country has seen substantial transaction volumes involving the Brazilian Real, making it the largest cryptocurrency market in South America and one of the largest globally in fiat currency transactions.
Overall, Brazil’s regulatory actions reflect a general trend among governments worldwide to closely manage and monitor cryptocurrency activities. This strategy aims to balance innovation and financial stability while ensuring compliance with tax laws and preventing illegal activities such as money laundering and tax evasion in the digital asset space.
