Brazil considering introduction of a 'cryptocurrency tax'…targets cross-border payments

The Brazilian government is reportedly considering imposing taxes on cross-border cryptocurrency payments.

On the 18th (local time), Reuters reported that the Brazilian government is considering applying the Tax on Financial Transactions (IOF) to cross-border fund transfers using cryptocurrencies such as stablecoins. Reuters said, "The Central Bank of Brazil this month classified (cross-border cryptocurrency payments) as foreign exchange transactions," and added, "Under current law, (Brazilian) investors must pay income tax on capital gains for cryptocurrency assets that exceed monthly exemption limits."

The government's consideration of a new tax comes as cryptocurrency trading volumes continue to grow. According to Brazilian tax authorities, Brazil's cryptocurrency trading volume in the first half of this year was 42.8 billion dollars (about 63 trillion won), up 20% from a year earlier. Reuters said, "Brazilian officials have long warned that stablecoins are being used more for payments than investment, and that new channels for money laundering are emerging amid regulatory gaps."