In 2022, Brazil implemented its Virtual Assets Law, designated as Law No. 14,478, which clearly specifies that virtual assets do not qualify as either national or international fiat currencies. Industry representatives emphasize that this clarification implies stablecoins cannot be categorized as foreign currency instruments under the IOF regulations.
Consequently, these organizations assert that any efforts to impose taxes via a decree or administrative directive would be illegal. According to Brazil’s constitutional guidelines, any introduction of new taxes or extensions of existing tax rules must go through legislative approval.
“Given this backdrop, any attempt to broaden tax applications to stablecoin transactions through a decree or administrative action is unlawful, as such measures cannot create or expand a tax-imposing event,” the statement articulates.
The groups also warned against confusing regulatory monitoring established by Brazil’s central bank with taxation measures. They argue that oversight of digital asset trades does not inherently validate the application of the IOF tax to these transactions.
Industry leaders contend that poor policy decisions could hinder the growth of this swiftly evolving sector. Brazil has risen to become one of the largest cryptocurrency markets globally, with approximately 25 million individuals engaged in the crypto landscape.
Stablecoin Growth in Brazil
The associations pointed out that Brazil’s cryptocurrency industry has flourished alongside a broader surge in financial innovation, which encompasses fintech services, digital payment systems, and blockchain technology. Additionally, they highlighted that similar taxes on stablecoin transactions are not prevalent in other leading economies.