Brazilian tax authorities step up supervision of foreign cryptocurrency exchanges

According to a Reuters report on June 18, Brazil’s federal tax special department is about to start information collection on foreign cryptocurrency exchanges operating in the country, with the purpose of ensuring that the operations of these exchanges comply with Brazil’s local regulations.

The tax authorities are paying particular attention to how these exchanges interact with Brazilian service providers and verifying whether they provide the details required under the 2019 regulations.

Andrea Chaves, Deputy Minister of Inspection, emphasized that the tax department’s first task is to find out how foreign exchanges operate in Brazil and whether there are any illegal activities. Chaves also mentioned that tax authorities will collect information on taxable Brazilian wealth.

The tax authorities are expected to issue a decree by the end of this week requiring foreign companies to comply with the regulations. Notably, foreign companies are not currently required to report their trading, unlike local exchanges.

The Reuters report mentioned that a number of foreign cryptocurrency exchanges, including Binance, Coinbase, OKX and KuCoin, are operating in Brazil, but this list of exchanges is not exhaustive, meaning there are more exchanges may also be active in this market.

Brazilian cryptocurrency activity continues to grow

As crypto activity increases, individuals and legal entities in Brazil have reported significant growth in the number of cryptocurrencies over the past year. A tax department report shows that in the first half of 2023, Brazil’s cryptocurrency trading volume reached 133.6 billion reais (approximately $24.6 billion), of which 14.5 billion reais (approximately 27 billion US dollars) were traded through foreign exchanges. One hundred million U.S. dollars). Compared with the first half of 2022, these two figures achieved growth of 36.6% and 51.2% respectively.

Brazil’s tax authorities are planning to use technology to update and publish new data on the domestic cryptocurrency market. This action reflects the tax authorities’ emphasis on the regulation of cryptocurrency transactions and their close attention to market dynamics.

Meanwhile, third-party research firm Kaiko Research revealed significant growth in the Brazilian cryptocurrency market in a report released in May. The report states that in the first five months of 2024, cryptocurrency trading volume in Brazilian reals has reached $6 billion, an increase of 30% compared to the same period last year, and this volume even exceeded that in U.S. dollars. Priced transaction volume.

Data from KaikoResearch shows that Brazil not only leads the cryptocurrency market in Latin America, but also ranks seventh globally in the cryptocurrency market denominated in fiat currencies. This is further proof of Brazil’s importance and influence in the global cryptocurrency scene.

in conclusion

The action by Brazil’s tax authorities reflects increased regulation of cryptocurrency exchanges globally. With the rapid growth of the cryptocurrency market, updates to tax compliance and regulatory frameworks are key to ensuring the healthy development of the market. Brazil’s move could provide a model for other countries to regulate foreign cryptocurrency exchanges.

At the same time, this also reminds cryptocurrency exchanges and investors that they must pay close attention to regulatory developments and ensure that their activities comply with local regulations.

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