Brazil’s Federal Revenue Service, Receita Federal do Brasil (RFB), is set to issue an ordinance this week to request information from foreign cryptocurrency exchanges. This move aims to determine how these platforms operate within the country and ensure Brazilian citizens comply with the nation’s new tax regulations.
Scrutiny of Foreign Crypto Operations
According to a June 18 report from Reuters, RFB will summon foreign exchanges for further details. “It’s an area of concern for us to understand first how they operate here, whether there’s any illegality or not,” stated Andrea Chaves, RFB’s Deputy Secretary of Inspection. She emphasized the importance of obtaining information on Brazilian wealth subject to taxation.
Previously, only domestic cryptocurrency exchanges were required to report transactions on their platforms. However, a law passed in December now mandates Brazilians to pay a 15% income tax on cryptocurrency profits and dividends earned through foreign exchanges.
Financial Goals and Market Dynamics
RFB aims to collect approximately $4 billion (20 billion Brazilian reals) in the 2024 fiscal year. Major exchanges operating in Brazil include Binance, Coinbase, OKX, and KuCoin, with Binance holding the largest market share at 79% of all transactions. However, Binance has seen a slight decline in dominance, facing competition from Brazil’s Mercado Bitcoin and Mexico-based Bitso.
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Rising Cryptocurrency Activity
The first few months of 2024 saw a significant increase in cryptocurrency trading in Brazil, with a 30% year-on-year rise, amounting to $6 billion between January and May. A Kaiko report highlighted Brazil as the largest market player in Latin America and the seventh-largest globally in terms of fiat currency trade. Notably, stablecoin transfers remain the primary source of cryptocurrency activity in the country.
