Brazil Closes Crypto Loophole with Tax to Align with Global Standards, Boost Revenue

Brazil is moving to close a regulatory loophole in its cryptocurrency market by proposing a tax on cross-border crypto transactions, a move aimed at aligning with global standards and boosting public revenue. The government is reportedly considering expanding the Imposto sobre Operações Financeiras (IOF), a financial transaction tax, to cover international transfers involving stablecoins and other digital assets. This shift comes as Brazil's crypto market surges, with stablecoins like Tether's USDT dominating cross-border payments according to market data.

The proposed tax would target transactions classified as foreign-exchange operations under new central bank rules set to take effect in February 2025. These rules reclassify stablecoin purchases, sales, and exchanges as forex activities, effectively subjecting them to the same regulatory framework as traditional currency transfers.

According to federal tax authority data, crypto transactions in Brazil hit 227 billion reais ($42.8 billion) in the first half of 2025, with stablecoins accounting for two-thirds of the volume. Officials estimate that unregulated crypto transfers could cost the government over $30 billion annually in lost revenue and customs duties according to sources.

The move aligns Brazil with the Organisation for Economic Co-operation and Development's (OECD) Crypto-Asset Reporting Framework (CARF), which standardizes international tax data sharing. By November 14, Brazil's Federal Revenue Service announced it would update its crypto reporting rules to comply with CARF, enabling access to citizens' foreign crypto accounts through a global data-sharing platform. This follows similar steps by the U.S., EU, and UAE, signaling a coordinated global effort to combat tax evasion in the crypto sector according to market analysis.

Stablecoins have become a focal point for regulators, who warn they are increasingly used for informal currency exchange and money laundering. Brazil's central bank emphasized that the new rules aim to prevent "regulatory arbitrage" by ensuring stablecoins are treated like traditional forex instruments. A Federal Police source noted that importers often underreport goods values and transfer the remaining payments via stablecoins to evade taxes, a practice costing the government billions.

The tax expansion faces political challenges. A bill proposed by lawmaker Eros Biondini seeks to exempt long-term crypto holders from capital gains taxes, arguing current levies are excessive. While the proposal could face legislative hurdles, it reflects growing tensions between pro-crypto advocates and regulators pushing for stricter oversight according to market analysis.

Market participants and analysts are divided on the implications. The tax could make stablecoins less attractive for remittances and international payments, potentially slowing their adoption. However, it may also provide much-needed fiscal support for Brazil, which struggles to meet budget targets. The Finance Ministry has not yet issued a public statement on the proposal, citing the confidential nature of ongoing discussions.

In parallel, Brazil's central bank has introduced broader crypto regulations, including mandatory licensing for exchanges and enhanced anti-money laundering (AML) requirements. These measures, combined with the proposed tax, signal a shift toward integrating digital assets into the formal financial system while tightening surveillance on cross-border flows according to market analysis.

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