Brazil Eyes Crypto Tax to Capture Billions

Brazil's Finance Ministry is evaluating the application of its foreign exchange transaction tax (IOF) to cross-border payments utilizing cryptocurrencies and stablecoins. This initiative stems from a desire to address a regulatory gap that allows Brazilians to bypass traditional foreign exchange taxes by using digital assets for international transactions. Such practices are estimated to cost the government over $30 billion in annual revenue, with importers reportedly using stablecoins to evade both IOF and import duties.

The Central Bank has recently reclassified stablecoin transactions as foreign-exchange operations, with new regulations slated to take effect in early 2026. This regulatory shift, coupled with expanded crypto reporting requirements for foreign exchanges operating in Brazil, signals a concerted effort to enhance oversight and tax compliance within the burgeoning digital asset market. The move comes as crypto transaction volumes in Brazil continue to grow significantly.

Authorities are particularly concerned about how certain importers may exploit this loophole. By officially declaring only a fraction of a transaction value and routing the remainder through stablecoin transfers, they can avoid significant tax liabilities. The Federal Police have identified this as a method contributing to customs evasion schemes, prompting the government to explore definitive measures to capture this revenue stream and ensure a more equitable tax system.