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Tax authority survey sheds light on cryptocurrency market in Brazil

. Oct 26, 2020
cryptocurrency market in Brazil

As things stand, Brazil does not regulate the cryptocurrency market, and transactions involving Bitcoin and other digital coins are not directly supervised by the country’s Central Bank. However, since August 2019, investors, companies, and currency exchanges have been legally obliged to report cryptocurrency transactions when they exceed BRL 30,000 (USD 5,300) per month. And this year, for the first time, Brazil’s Federal Revenue Service has used this data to tighten up its monitoring of income tax evasion.

A survey released by the Federal Revenue Service showed that Brazilian taxpayers declared a total of USD 101.5 billion in cryptocurrency transactions between August 2019 and July 2020. This is the equivalent to roughly five times Brazil’s total gold exports last year.

</p> <p>The research also sheds light on the <a href="https://brazilian.report/tech/2020/08/05/argentinian-fintech-believes-in-cryptocurrency-to-beat-currency-volatility/">most popular digital coins</a> in Brazil. Bitcoin (BTC) unsurprisingly leads the way, followed by XRP and Tether (USDT). Together, the trio accounted for over 90 percent of declared cryptocurrency transactions throughout the one-year period.</p> <ul><li>Bitcoin (BTC): BRL 44 billion</li><li>XRP: BRL 42.8 billion</li><li>Tether (USDT): BRL 9.8 billion</li></ul> <p>Among other findings, tax authorities showed that the majority of transactions involved overseas exchanges, and around nine out of ten cryptocurrency investors in Brazil were male.</p> <p>Furthermore, the results show that cryptocurrency transactions were not affected negatively by the coronavirus pandemic. In fact, July 2020 recorded the highest amount of transactions: USD 14.8 billion.</p> <h2>Cryptocurrency has plenty of room to grow</h2> <p>Safiri Felix, CEO of the Brazilian Cryptoeconomy Association, says that Brazil currently makes up just one percent of cryptocurrency transactions worldwide, in a market that circulates approximately USD 4 billion per day. Indeed, notes Mr. Felix, the findings of the Federal Revenue Service suggest that Brazil has massive room for growth.</p> <p>The first step would be to implement regulation. While proposals on the issue have been submitted to Congress, debates are progressing at a snail&#8217;s pace.</p> <p>One of these bills, presented by Senator Soraya Thronicke, establishes that the <a href="https://brazilian.report/business/2020/08/13/will-2020-see-overhaul-payments-market-brazil/">Central Bank</a> and Brazil&#8217;s Securities Commission (CVM) would be made responsible for regulation and oversight. The proposal also intends to make legislative changes to properly address the use of cryptocurrencies in crimes such as fraud, market tampering, and unjust enrichment.</p> <p>Debates in Brazil&#8217;s lower house are more mature, with one crypto regulation proposal processing since 2015. Representatives set up a special committee and held several public hearings on the matter, yet this was put on hold by the coronavirus pandemic.</p> <p>“We believe the debates in Congress must advance”, says Mr. Felix. “We expect that regulation will close gaps and make Brazil more attractive so that not only may transactions currently carried out abroad be conducted here, but also that the domestic market may become more attractive to foreign operators,&#8221; he adds.

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