Global Cryptocurrency Regulations Vol 3: Brazil

Summary

1. Stablecoins as a 'loophole' leading Brazil to comprehensive regulation in foreign exchange and taxation

In Brazil, the rapid expansion of stablecoin usage, primarily USDT, driven by inflation and remittance needs, accounted for about two-thirds of cryptocurrency transactions in early 2025. Concurrently, rampant tax evasion and underground remittances have resulted in estimated annual tax revenue losses exceeding $30 billion. In response, the government has shifted its policy to treat cryptocurrency transactions as foreign exchange transactions, incorporating them into the scope of IOF (Financial Transaction Tax).

2. Strict frameworks for cross-border transactions and operators under new regulations effective February 2026

The new system classifies the purchase, remittance, and exchange of cryptocurrencies, including stablecoins, as foreign exchange transactions, introducing a remittance cap (equivalent to $100,000 per transaction) and restrictions on dealings with non-licensed operators. Operators are required to obtain a new license (SPSAV), implement AML/CFT systems, and meet substantial capital requirements. Foreign operators must also establish local entities. A uniform tax rate of 17.5% on profits is applied, and international information sharing based on CARF is enhanced.

3. Exploring the use of digital assets as a 'national strategy' alongside regulatory strengthening

While the application of IOF curbs the use of cryptocurrencies for cross-border purposes, clearer regulations enhance market transparency and reliability, attracting long-term and institutional investors. The central bank has paused the testing of the CBDC 'Drex' and shifted focus to private-led tokenization and stablecoins. Additionally, the incorporation of Bitcoin into national reserves is under consideration, positioning Brazil as a 'model case' for simultaneously advancing regulatory enforcement and digital asset strategies.

Accelerated Adoption of Stablecoins

In Latin America, prolonged inflation and political instability have driven the adoption of USD-denominated stablecoins as a means of value preservation. The region also sees high demand for cryptocurrencies as a low-cost, fast international remittance method.

In particular, Brazil recorded the largest annual transaction volume in Latin America during 2024-25, driven by an increase in the IOF tax rate, with two-thirds of these transactions attributed to the USDT stablecoin.

Furthermore, the Central Bank of Brazil (BCB) notes that stablecoins account for about 90% of cross-border transaction volumes. Federal Police sources indicate cases where only 20% of the cost for imported machinery and parts was declared, with the remainder paid in USDT to evade customs duties.

Such 'underground remittances' using stablecoins have led the Brazilian government to estimate annual tax revenue losses of over $30 billion.