Brazil Introduces New Regulations for Foreign Crypto Businesses

Brazil has been proactive in its adoption of cryptocurrencies and global crypto markets, with major exchanges Binance, Coinbase, OKX and KuCoin receiving more serious attention.

These platforms were asked to provide details of their operations and partnerships with local service providers, particularly those related to the issue of compliance of tax legislation.

Companies located in other countries, unlike some local ones, are not subject to Brazilian laws that require them to provide information to the regulatory authority about the way they operate. The seriousness of this issue has been highlighted by the Brazilian tax authority. Andrea Chavez, Undersecretary for Inspections at Brazil's Federal Tax Service, said:

"It is very important for us to investigate their activities in this country and find out if illegal activities are taking place. We are also interested in learning about the taxable wealth of Brazilians.”

Wagner Lima, risk management co-ordinator at the Revenue Office, said the government is looking to understand how these international players cooperate with local suppliers as part of the implementation of the 2019 regulations.

What we are witnessing right now is hardly an isolated case. Brazil has seen a significant increase in crypto transactions. For the period from January to July 2023, Brazilians transacted $24.6 billion worth of cryptocurrencies, an increase of 36.6% over the previous year. Most notably, $2.6 billion accounted for such operations through foreign exchanges, which is 51.2% more than the volume in 2022.