Glitch-style illustration of a government building with a Bitcoin coin, clock showing delay, and 3.5% text representing Brazil's crypto tax.
Brazil's new finance minister shelved a crypto tax plan that could have imposed rates up to 3.5% on stablecoin trades.

Brazil's new finance minister has delayed a controversial plan to tax crypto transactions as foreign exchange operations at rates up to 3.5%, after industry groups representing over 850 companies called the proposal unconstitutional.

A proposal to tax certain crypto trades as foreign exchange at rates up to 3.5% has been pushed back after industry groups called it unconstitutional.

Quick Insights

  • Brazil's new finance minister has delayed a public consultation on taxing some crypto transactions as foreign exchange operations to avoid clashing with Congress during an election year.
  • The proposed tax could apply rates as high as 3.5% to certain crypto trades, with industry groups representing over 850 companies calling the plan illegal under Brazil's constitution.
  • A separate proposal to scrap tax breaks on investment securities may also be shelved.

Brazil's newly appointed finance minister, Dario Durigan, has put the brakes on a contentious plan to apply the country's financial operations tax to certain cryptocurrency transactions. The delay was first reported by Reuters, which cited sources close to the decision.

Durigan stepped into the role on March 20 after his predecessor, Fernando Haddad, resigned to pursue a run for governor of São Paulo. According to Reuters, the new minister wants to keep the focus on smaller economic reforms and steer clear of politically explosive measures ahead of elections.

How the Crypto Tax Would Have Worked

At the heart of the shelved consultation was a draft decree that would have classified some cryptocurrency transactions as foreign exchange operations. In Brazil, foreign exchange deals fall under a tax known as the Imposto sobre Operações Financeiras (IOF), which carries rates ranging from 0.38% on certain inbound capital flows all the way up to 3.5% on overseas purchases and international remittances. Transfers tied to foreign investment can attract a 1.1% rate.

If crypto transactions were reclassified under those rules, it would have meant a significant new cost for traders and businesses operating in the digital asset space.

Industry Groups Call the Crypto Tax Unconstitutional

The proposal was already facing stiff resistance before Durigan took office. A coalition of five major industry bodies, including ABcripto, ABFintechs, Abracam, ABToken, and Zetta, issued a joint statement opposing the plan. Together, these groups represent more than 850 companies in Brazil's fintech and crypto sectors.

Their core argument is straightforward: stablecoins are not fiat currency. Treating them as foreign exchange instruments through a decree or administrative rule would violate both Brazil's constitution and its 2022 Virtual Assets Law, the groups said.

Where the Crypto Tax Idea Came From

The idea picked up momentum in February after Brazil's central bank moved to classify part of the crypto market, particularly stablecoin activity, within the scope of existing foreign exchange regulations. That decision gave the Finance Ministry and tax authorities a legal foothold to explore whether those transactions should be subject to IOF.

With the consultation now on hold, the ministry may also back away from a separate proposal that would have ended tax breaks on certain investment securities. Both moves suggest Durigan is prioritising political stability over ambitious fiscal reform in the early weeks of his tenure.

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