Exclusive-Brazil eyes taxing crypto for cross-border payments, sources say

Core Viewpoint - Brazil is considering implementing a tax on the use of cryptocurrencies for international payments to close a regulatory loophole in its foreign-exchange transaction levies [1][2]. Group 1: Taxation and Regulatory Changes - The Finance Ministry is exploring the expansion of the financial transaction tax (IOF) to include cross-border transfers using virtual assets and stablecoins, which have recently been classified as forex operations by the central bank [2][4]. - Currently, crypto transactions are not subject to the IOF tax, but investors are required to pay income tax on capital gains exceeding a monthly exemption [2][4]. - New central bank rules, effective in February, will classify any purchase, sale, or exchange of stablecoins as a foreign-exchange transaction, covering various forms of international payments and transfers [7]. Group 2: Market Impact and Revenue Generation - The potential tax change aims to close a regulatory gap and could lead to increased public revenue, which is critical as Brazil aims to meet its fiscal targets [4][6]. - Brazil's crypto market has experienced significant growth, with transactions reaching 227 billion reais (approximately $42.8 billion) in the first half of 2025, marking a 20% increase from the previous year [5]. - The majority of this transaction volume (two-thirds) was attributed to USDT, a dollar-backed stablecoin, while bitcoin accounted for only 11% of transactions [5][6].