What to Know:
- Brazil’s crypto market is processing between $6 billion and $8 billion in transactions per month, with stablecoins accounting for up to 90% of reported transactions.
- The country’s tax authority, Receita Federal, is introducing a new reporting system called DeCripto, which will replace the existing rule and enable the automatic exchange of tax information between jurisdictions.
- The changes come as Brazil’s central bank introduces its most extensive set of crypto regulations, including a licensing regime for crypto service providers and stricter capital requirements.
Brazil’s cryptocurrency market is experiencing rapid growth, with billions of dollars in transactions being processed every month. According to Flavio Correa Prado, an auditor at Receita Federal, the country’s tax authority, crypto transactions reported under existing rules have reached between $6 billion and $8 billion per month. This figure is expected to rise to $9 billion monthly by 2030 if current trends continue. The majority of this volume comes from stablecoins, such as USDT and USDC, which have become the dominant players in the country’s crypto market.
The shift towards stablecoins and the scale of the volumes is driving a significant change in how Brazil tracks crypto assets. Receita Federal is set to introduce a new reporting system called DeCripto, which will replace the existing rule known as IN 1.888. DeCripto is based on the Crypto-Asset Reporting Framework (CARF), an international standard developed by the OECD and adopted by over 60 countries. The framework enables the automatic exchange of tax information between jurisdictions, providing local authorities with access to data on offshore cryptocurrency transactions.
Under the new rules, exchanges will be required to classify transactions into specific categories, including crypto-to-fiat trades, crypto-to-crypto swaps, retail payments over $50,000, transfers in and out of wallets, and movements to unhosted wallets. Data collection is set to begin in January 2025. As Prado noted, “The new system will provide us with more accurate and detailed information about crypto transactions, which will help us to better understand the market and identify potential risks.”
The changes come as Brazil’s central bank introduces its most extensive set of crypto regulations to date. The new framework creates a licensing regime for crypto service providers and brings a wide range of activities under the country’s foreign exchange and capital market rules. Crypto firms will be required to hold between $2 million and $7 million in capital, depending on their business type, and foreign companies serving Brazilian clients must establish a local entity. Companies that fail to comply with the new regulations within a nine-month window risk being barred from operating.
The introduction of these regulations is expected to have a significant impact on Brazil’s crypto market. As the country’s crypto economy continues to grow, the need for effective regulation and oversight has become increasingly important. The new rules are designed to provide greater transparency and accountability, which should help to build trust and confidence in the market. As the crypto market continues to evolve, it is likely that we will see further changes and developments in the regulatory landscape.
