Brazil’s Crypto Industry Threatens Lawsuit Over Stablecoin Tax

Core Viewpoint - Brazil's crypto industry is prepared to take legal action against the government if a new tax on stablecoin transfers is implemented, as stablecoins constitute up to 90% of crypto trading in the country, impacting users significantly [1][6]. Group 1: Legal and Regulatory Dispute - The industry group Abcripto argues that the Finance Ministry lacks the legal authority to impose this tax, claiming it would violate the constitution [2]. - Lawmakers and regulators view stablecoins as a means to facilitate transactions under existing currency regulations, highlighting a significant disagreement [2][4]. - The Finance Ministry intends to classify stablecoin transfers similarly to foreign currency exchanges, which are currently taxed under the IOF tax [4]. Group 2: Impact on Users - The proposed tax on stablecoin transfers could lead to increased costs for regular users, including freelancers, small businesses, and families sending money abroad, as it would affect a large portion of the crypto market [6][7]. - Brazil has already replaced its tax-free limit on crypto gains with a flat 17.5% tax, and the addition of a transfer tax could make using stablecoins feel like incurring fees for every transaction [7]. Group 3: Future Regulatory Landscape - New central bank regulations set to take effect in February 2026 would categorize stablecoin payments as foreign exchange activities, which the industry claims exceeds congressional approval [5]. - The situation in Brazil reflects a broader global challenge, as governments worldwide are grappling with how to tax and regulate digital currencies, similar to issues faced in India and the U.S. [8].