Brazil tightens regulation on foreign exchanges amid rising number of crypto holders
Brazil tightens regulation on foreign exchanges amid rising number of crypto holders
In a move to bolster financial oversight, Brazil's tax authority is set to summon foreign crypto exchanges to provide detailed information on their operations within the country.
Brazil's federal revenue service is expected to issue an ordinance this week mandating these exchanges, which include major platforms like Binance, Coinbase, OKX, and KuCoin, to clarify their operational frameworks and their cooperation with local service providers.
This measure is a response to concerns about potential illegal activities and the accurate reporting of Brazilian wealth subject to taxation.
Andrea Chaves, Deputy Secretary of Inspection at the Revenue Service, emphasized the need to understand the operational dynamics of these exchanges to detect any illegality and ensure the accurate reporting of assets held by Brazilian investors.
Additionally, Wagner Lima, the Risk Management Coordinator at the Revenue Service, highlighted the government's interest in assessing the cooperation between foreign exchanges and local entities to guarantee compliance with a 2019 regulation requiring detailed transaction reporting.
This tightening of rules comes amidst a significant surge in crypto asset declarations in Brazil. From January to July 2023, Brazilians declared 133.6 billion reais ($24.6 billion) in crypto assets, marking a 36.6% increase compared to the same period in the previous year. Notably, 14.5 billion reais of this total were declared through foreign exchanges, reflecting a 51.2% growth year-on-year, according to Reuters.
The initiative by Brazil's tax authority underscores the government's proactive stance in regulating the rapidly growing crypto market, aiming to mitigate risks associated with unregulated foreign exchanges and ensure the integrity of the financial system.
This move is expected to provide greater clarity on the operations of these exchanges and enhance the regulatory framework governing cryptocurrency transactions in Brazil.
The outcome of this initiative could set a precedent for other countries grappling with similar regulatory challenges in the crypto sector.
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