Brazil’s Special Ministry of Federal Taxes will begin collecting information from foreign crypto exchanges to ensure their operations comply with local regulations, Reuters reported. June 18.
The tax authorities will ask foreign crypto exchanges how they interact with local service providers and ensure that the companies provide the data required by the regulations introduced in 2019.
Deputy Secretary for Inspectorate Andrea Chaves said:
“It is a concern for us to first understand how [the foreign exchanges] operate here, whether there is illegality or not.”
Chavez said the tax authorities will also collect information on Brazilian wealth subject to tax.
The tax authorities are expected to release a regulation calling for foreign exchange before the end of the week. Unlike local Brazilian stock exchanges, foreign companies are not required to report transactions.
Reuters identified Binance, Coinbase, OKX and KuCoin as foreign exchanges operating in the country, although the list is non-exhaustive.
The rising crypto activity in Brazil
According to tax authorities data cited by Reuters, individuals and legal entities have reported higher crypto amounts over the past year amid rising activity in the country.
Tax reporters declared 133.6 billion reals ($24.6 billion) worth of cryptocurrencies in the first half of 2023, of which 14.5 billion reals ($24.6 billion) was worth cryptocurrencies.2.7 billion) on foreign exchange. The figures represent growth of 36.6% and 51.2% in each category compared to the first half of 2022.
Brazil’s tax authorities plan to release updated data through a technology update.
More recent third-party data also indicates growth. In a May research report, Kaiko Research found that cryptocurrency trading volume involving the Brazilian real reached $6 billion between January and early May 2024.
The $6 billion volume represents a 30% growth over the previous year and exceeds US dollar trading volumes. Kaiko’s recent data also indicates that Brazil is the largest crypto market in Latin America and the seventh largest fiat currency market in the world.