Tax regulations

Brazilian cryptocurrency exchanges hit hard by tax regulations

Brazilian tax authorities have been more active in regulating the crypto market, leading to what one observer called a market cooling for smaller exchanges.

Following the re-application of new tax standards in August 2019, Brazil has recently seen some of the results of these actions. Cointelegraph Brasil reported that two major cryptocurrency exchanges based in the South American nation have been shut down following threats of heavy fines and the immediate effects of regulation.

Acesso Bitcoin was one of the exchanges to voluntarily close its doors. Co-founder Pedro Nunes reportedly blamed the new tax rules for the shutdown:

“After the introduction of these rules by the Federal Revenue Service, we saw a significant decrease in volume traded. We also believe that the market has cooled for smaller exchanges. “

Latoex, another Brazil-based crypto exchange, faces similar issues. The company is considering a 100,000 Brazilian reals (BRD) fine if it does not comply with a stay order issued by the Brazilian Securities and Exchange Commission.

Current crypto regulations in Brazil

Since Brazil does not currently have a law dedicated to cryptography, all exchanges fall under the jurisdiction of Normative Instruction No.1888 issued by the Federal Revenue Ministry. All companies doing crypto transactions in Brazil must report them or face fines, ranging from BRD 500 to BRD 1,500, or $ 120 to $ 360.

Both chambers of Brazil’s National Congress are considering proposals to regulate the country’s crypto industry. A special committee analyzes and revises such a motion, Bill 2303/2015. Meanwhile, the Senate is considering two other bills, PL 3825/2019 and PL 3949/2019. As of February 2020, no specific legislation had been enacted to establish regulations for the cryptocurrency market in Brazil.

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