Recently, Brazil’s Special Department of Federal Revenue has announced that they will be collecting information from foreign crypto exchanges to ensure that they are complying with local regulations. This move comes as a response to the increasing activity in the country’s crypto market and the need to crack down on potential illegality.
Deputy Secretary of Inspection Andrea Chaves highlighted the department’s concerns, stating that they want to understand how foreign exchanges operate in Brazil and whether there are any illegal practices taking place. The tax department will also be focusing on collecting information about Brazilian wealth that should be subject to taxes.
The tax department plans to release an ordinance summoning foreign exchanges to provide the necessary information. Unlike local exchanges, foreign companies do not currently have to report transactions, which has raised concerns about tax evasion and non-compliance.
Growth in Crypto Reporting
According to recent data, individuals and legal entities in Brazil have reported significantly higher amounts of crypto in the past year. In the first half of 2023, tax reporters declared $24.6 billion of crypto, with $2.7 billion coming from foreign exchanges. This represents a substantial increase from the previous year, indicating a growing trend in crypto activity in the country.
Technological Updates and Market Insights
The tax department plans to release updated data through technological updates to ensure more transparency and compliance. Third-party research reports have also indicated significant growth in Brazil’s crypto market, with trading volume reaching $6 billion in the first few months of 2024. This growth outpaces US dollar trading volumes, showing the increasing importance of the Brazilian market in the global crypto landscape.
Overall, the crackdown on foreign crypto exchanges in Brazil reflects the government’s commitment to regulating the industry and ensuring compliance with tax laws. As the crypto market continues to expand, it is crucial for authorities to stay vigilant and enforce regulations to prevent illegal activities and promote transparency in the sector.