Brazil’s tax authorities announced they’re set to start demanding information from multinational crypto exchanges to make sure they follow local laws.
Where is the money?
According to a Reuters report, the Special Department of Federal Revenue in Brazil wants to summon foreign crypto exchanges to learn how they interact with local service providers, how they operate in the country.
Andrea Chaves, Deputy Secretary of Inspection, mentioned the department’s goal to understand the operations of these foreign exchanges and detect any potential illegal activities.
The department will also gather data about Brazilian wealth, Brazilian citizens’ personal financial status, to know what should be taxed. Unlike Brazilian exchanges, non-crypto foreign companies currently don’t need to report these informations yet.
Comply or penalty
The move to monitor foreign exchanges is wants to motivate compliance with local laws and helps the government track their citizens, their taxable wealth.
This step highlights Brazil’s increasing regulatory focus on the growing crypto market, as the collection of this data could lead to more strict regulations and impact how cryptocurrency exchanges operate within the country.
Industry participants says that this increased oversight might motivate more exchanges to comply with local laws or face penalties.
Growing volumes
Brazil has seen a big increase in crypto activity. Data from the tax department shows that individuals and businesses reported 133.6 billion reals ($24.6 billion) in crypto assets during the first half of 2023, with 14.5 billion reals ($2.7 billion) on foreign exchanges.
These figures represent a pretty nice 36.6% and 51.2% growth in each category, compared to the first half of 2022.
Newest numbers from Kaiko Research shows that trading volume involving the Brazilian real reached $6 billion between January and early May 2024, and this also represents a 30% increase from the previous year and surpasses US dollar trading volumes.
Brazil is now considered the largest crypto market in Latin America and the seventh-largest fiat currency market globally.
