Brazil Treats Stablecoins as Forex to Curb Evasion, Boost Revenue

Brazil is set to expand its financial transaction tax (IOF) to include cross-border cryptocurrency payments, a move aimed at closing regulatory gaps and boosting public revenue, according to two officials familiar with the discussions. The Finance Ministry is considering applying the IOF to virtual asset transactions, particularly stablecoins, which the central bank recently classified as foreign-exchange (forex) operations according to sources. This would mark a significant shift, as crypto transactions are currently exempt from the IOF, though investors already pay income tax on capital gains exceeding monthly thresholds according to data.

The central bank's new regulatory framework, effective in February 2026, will treat stablecoin purchases, sales, and exchanges as forex transactions. This includes international payments, card settlements, and transfers to self-custody wallets according to reports. The move follows concerns that stablecoins-such as Tether's dollar-backed USDT-are being used to circumvent traditional forex regulations. Federal tax authority data reveal that crypto transactions in Brazil surged to 227 billion reais ($42.8 billion) in the first half of 2025, a 20% annual increase, with USDT accounting for two-thirds of the volume. By contrast, bitcoin represented just 11% of transactions according to the same data.

Officials emphasized that the tax expansion is not solely revenue-driven but also seeks to combat money laundering and regulatory arbitrage. A Federal Police source noted that crypto transfers are being used to evade customs duties, costing the government an estimated $30 billion annually in lost import taxes. "If you import machinery, declare 20% officially, and send the other 80% via USDT without paying customs duties, IOF is the least of your problems," the source said according to reports.

Globally, Brazil's approach aligns with broader efforts to standardize crypto taxation. The U.S. is reviewing a proposal to join the Crypto-Asset Reporting Framework (CARF), a global initiative involving 72 countries, including Brazil, to share crypto transaction data and combat tax evasion according to industry sources. The U.S. plans to implement similar rules domestically in 2026, requiring exchanges to report detailed transaction data via 1099-DA forms.

Brazil's Finance Ministry has not officially commented on the IOF expansion, but tax authorities have already tightened reporting requirements for foreign crypto service providers operating in the country according to officials. The central bank's classification of stablecoins as forex assets is seen as a critical step toward formalizing oversight, ensuring that "the use of stablecoins does not create regulatory arbitrage" vis-a-vis the traditional foreign-exchange market.

As the February rules take effect, stakeholders will watch closely whether the tax measures achieve their dual goals of plugging loopholes and generating much-needed revenue for Brazil's struggling fiscal targets.