Regulation
Brazilian tax department to examine foreign cryptocurrency exchange operations
Brazil’s Receita Federal is set to increase oversight of foreign digital asset exchanges operating within its borders, in a bid to strengthen regulation and transparency in the booming sector. The national tax administration seeks to collect operational data from platforms such as BinanceCoinbase and Kraken despite the need for a well-defined regulatory framework for cryptocurrencies in the country.
Brazil strengthens surveillance on foreign crypto exchanges
As the popularity of digital assets increases in Brazil, the government is taking steps to understand and supervise the operations of international cryptocurrency exchanges. With a mandate expected to be released this week, these platforms must disclose their operational methodologies and customer service practices in the region. Brazilian tax authorities ensure that these companies comply with local tax laws and
fight against money laundering regulations.
The move comes as the use of digital assets in Brazil increases, with reported crypto holdings by Brazilians reaching 133.6 billion reais ($24.6 billion) from January to July 2023. This represents a significant increase of 36 .6% compared to the previous year. This oversight is crucial as the government pushes for increased transparency while continuing to develop a concrete regulatory framework, which is expected to be proposed by the end of 2024.
Receita Federal to audit international crypto platforms
Andrea Chaves, Deputy Secretary of the Inspection of the Receita Federal, highlighted the need for this initiative. The government aims to verify that these exchanges comply with tax obligations and do not engage in illegal activities. Additionally, they want to ensure that the services offered to Brazilian customers are completely legal. This comes amid concerns that some platforms could circumvent local regulations, which could lead to undeclared income and facilitate illicit financial flows.
Additionally, Wagner Lima, risk management coordinator at the Revenue Service, highlighted the need to review collaborations between foreign exchanges and local service providers. This control ensures compliance with a 2019 regulation that requires information sharing, which is crucial to maintaining the integrity of Brazilfinancial systems.
The upcoming order will require exchanges to provide detailed details of their operations, but will exclude customer-specific data and transactional information, in accordance with current Brazilian laws. The increase in assets declared via foreign exchange, which saw a jump of 51.2% compared to the previous year, underlines the growing importance of these platforms in the local market.
Read also: Ondo Finance partners with Drift for RWA integration, will ONDO prices increase?