Brazil Plans to Tax Cryptocurrency for International Transactions

BRAZILIA, Brazil — Brazil is considering taxing cryptocurrencies used for international payments, aiming to close a loophole in its foreign exchange tax, according to two officials familiar with the discussions.

The Finance Ministry is currently evaluating the expansion of its financial transaction tax, known as IOF, to include certain cross-border transfers using virtual assets and stablecoins. This proposal comes as Brazil grapples with fiscal targets and the need to enhance public revenue.

Currently, cryptocurrency transactions do not fall under the IOF tax. Instead, investors face income tax on any capital gains exceeding monthly exemptions. However, this potential new tax could boost state revenues significantly, especially as Brazil’s crypto market has grown rapidly in recent years.

Data from the federal tax authority revealed that in the first half of 2025, Brazil recorded 227 billion reais (approximately $42.8 billion) in cryptocurrency transactions, a 20% increase from the previous year. A large portion of these transactions involved USDT, a stablecoin pegged to the U.S. dollar, which constituted two-thirds of all trading volume.

The central bank’s recent regulatory framework supports the proposed tax changes by designating stablecoin transactions as foreign exchange operations. This classification means that purchases and sales of stablecoins, as well as international payments and transfers using virtual assets, could be taxed similarly to traditional currency exchanges.

According to one anonymous source, the government seeks to eliminate regulatory arbitrage that may arise from stablecoin usage, primarily for payments instead of investments. The new rules are expected to take effect in February 2026 and will require crypto-service providers to obtain licenses and comply with anti-money laundering regulations.

Officials indicated that the lack of oversight in the current system allows individuals to bypass taxes. One Federal Police official suggested that the government may be missing out on more than $30 billion in annual revenue due to payments made with cryptocurrencies to evade taxes.

The government believes that implementing the IOF tax on crypto transactions will enhance transparency, reduce money laundering risks, and adapt to the increasing use of stablecoins for payments. As the demand for digital assets continues to rise, Brazilian officials remain cautious about the implications for financial regulation.