Brazil’s tax authority, the Receita Federal, is set to increase scrutiny on foreign cryptocurrency exchanges operating within the country to bolster regulation and transparency amid a rise in digital asset usage in Latin America’s largest economy.
According to recent reports, the Receita Federal will soon publish an order requiring these international platforms, including Binance, Coinbase, and others, to provide detailed operational data and information on their cooperation with local service providers.
According to Reuter’s report, Andrea Chaves, Deputy Secretary of Inspection at the Federal Revenue Service, stressed the need for this measure, claiming that, “It’s an area of concern for us to understand first how they operate here, whether there’s any illegality or not. ” The government wants to ensure compliance with taxation and that the services provided to customers in Brazil are fully legal.
Wagner Lima, a risk management coordinator at the Receita Federal, highlighted the need to review collaborations between foreign exchanges and local service providers to ensure compliance with a 2019 regulation mandating information sharing.
The decision comes as Brazilians declared 133.6 billion reais ($24.6 billion) in crypto assets from January to July 2023, marking a 36.6% increase from the previous year’s totaling, 14.5 billion reais were declared using exchanges abroad, showing a 51.2% growth on the same basis.
The upcoming order, set to be released, will ask exchanges to share their ways of operating and how they serve customers in Brazil. However, it will exclude customer-specific data and transactional information to adhere to current Brazilian laws.
The Brazilian authorities are also concentrating on constructing a clear framework for digital currencies and their legal status, which is expected to be introduced by the mid of 2024. This framework is intended to organize the local and foreign exchanges operating within Brazil to increase their compliance with the local laws and legal requirements.
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