Brazil’s Special Department of Federal Revenue will soon start gathering data from international crypto exchanges to ensure compliance with local regulations, according to a Reuters report on June 18.
Information Collection from Foreign Exchanges
The tax department will request details from foreign crypto exchanges regarding their interactions with local service providers. This effort aims to ensure these companies adhere to the regulations established in 2019.
Concern Over Foreign Exchange Operations
Deputy Secretary of Inspection Andrea Chaves emphasized the importance of understanding how foreign exchanges operate in Brazil and identifying any potential illegal activities. The tax department will also collect information about Brazilian wealth subject to taxation.
Upcoming Ordinance for Compliance
An ordinance summoning foreign exchanges is expected to be released by the tax department before the week’s end. Unlike Brazilian exchanges, foreign companies are not currently required to report their transactions.
Identified Foreign Exchanges
Reuters identified Binance, Coinbase, OKX, and KuCoin as some of the foreign exchanges operating in Brazil. However, this list is not exhaustive.
Increasing Crypto Activity in Brazil
Rising Crypto Amounts Reported
The tax department’s data shows a significant increase in the amount of crypto reported by individuals and legal entities over the past year. In the first half of 2023, 133.6 billion reals ($24.6 billion) worth of crypto was reported, including 14.5 billion reals ($2.7 billion) on foreign exchanges. This marks a 36.6% and 51.2% growth in each category compared to the first half of 2022.
Technological Updates for Data Release
The tax department plans to release updated data through a technological upgrade, ensuring accurate and timely information.
Third-Party Data Confirms Growth
Kaiko Research’s May report highlights the growth in crypto trading volume involving the Brazilian real, which reached $6 billion between January and early May 2024. This volume represents a 30% increase from the previous year and surpasses US dollar trading volumes. Brazil is now recognized as the largest crypto market in Latin America and the seventh-largest fiat currency market globally.
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