Brazil Mulls Expanding Forex Tax to Include Crypto Transactions

Brazil is considering extending its foreign exchange transaction tax (IOF) to cover cryptocurrency use in international payments. This move aims to address a regulatory gap that currently allows crypto transactions to bypass the IOF tax.

• The Finance Ministry is examining the application of the IOF tax to cross-border transfers using digital assets and stablecoins.
• Currently, crypto transactions are not subject to the IOF tax, though income tax applies to capital gains exceeding a monthly exemption.
• Brazilians can use stablecoins for dollar-equivalent assets and international payments without paying the IOF tax applicable to traditional forex operations.
• This loophole has facilitated customs evasion schemes, leading to an estimated annual revenue loss of over $30 billion for the government.

Market Data and Regulatory Changes

• Crypto transactions in Brazil reached 227 billion reais ($42.8 billion) in H1 2025, a 20% increase from H1 2024.
• Tether accounted for two-thirds of the transaction volume, while Bitcoin represented 11%.
• The Central Bank classified stablecoin transactions as forex operations, with new regulations effective from February 2026.
• The Federal Revenue Service updated crypto reporting requirements, aligning them with international standards.
• Officials highlight that stablecoins are primarily used for payments, posing money laundering risks.
• Stablecoin reserve practices face increased scrutiny globally, with potential impacts on issuers like Tether.

These developments indicate a tightening regulatory environment in Brazil for cryptocurrencies, particularly in international transactions and reporting obligations.