Brazil’s government is actively considering extending its IOF (Tax on Financial Operations) to cryptocurrency transactions used for cross-border payments, particularly those involving stablecoins like USDT.
This move, reported Reuters and echoed across multiple outlets, aims to close a regulatory loophole that currently exempts crypto from the IOF levy applied to traditional foreign-exchange operations.
Officials emphasize that the policy is primarily about regulatory alignment rather than revenue generation, though it could help address fiscal shortfalls amid Brazil’s ongoing budget challenges.
The tax would target international transfers using virtual assets, including stablecoin payments, card settlements, and movements to/from self-custody wallets. It builds on the Brazilian Central Bank’s recent classification of stablecoin activities as foreign-exchange operations under Resolution BCB nº 521.
New foreign-exchange rules for stablecoins take effect February 2, 2026, with specific provisions starting May 4, 2026. Crypto service providers have a nine-month compliance window. Final tax guidance from the Federal Revenue Service is expected in the coming months.
While capital gains from crypto trading are already taxed at 17.5% above a monthly exemption threshold introduced mid-2025, payments via crypto have evaded IOF. Expanded reporting rules, effective November 17, 2025, now require foreign exchanges operating in Brazil to disclose transactions.
Brazil’s crypto market has exploded, with transactions totaling 227 billion reais $42.8 billion in the first half of 2025—a 20% year-over-year increase. Stablecoins dominate about two-thirds of volume, often used for dollar hedging and low-cost remittances rather than speculation.
However, this has raised red flags. Crypto enables bypassing IOF on forex up to 6.38% on certain operations and import duties. Federal Police estimate annual revenue losses exceed $30 billion from undeclared crypto imports.
Authorities view stablecoins as a payment tool that could facilitate illicit flows, prompting calls for better tracking. The proposal coincides with Brazil’s adoption of the CARF (Crypto-Asset Reporting Framework), an OECD standard for sharing crypto transaction data internationally to combat evasion.
This mirrors trends in other nations tightening crypto oversight. The Finance Ministry has declined to comment, but sources describe the review as “careful,” noting that Central Bank classifications don’t automatically impose taxes— that’s up to the tax authority.
Crypto news outlets and X users highlight the shift as a “crackdown” on stablecoin dominance, with some warning it could stifle remittances in Latin America’s largest economy. Posts on X describe it as Brazil “quietly aligning with global tax snoops” while eyeing revenue from a $42B+ market.
Proponents argue it levels the playing field for traditional finance and boosts visibility for anti-evasion efforts. Critics, including some X discussions, fear it may drive activity offshore or increase costs for everyday users.
This development underscores Brazil’s balancing act: fostering a booming crypto ecosystem, it’s LATAM’s top market while plugging fiscal gaps. If implemented, it could set a precedent for other emerging markets grappling with stablecoin surges.
Officials estimate annual losses exceeding $30 billion from undeclared crypto imports and forex evasion, where users bypass IOF up to 6.38% and import duties by routing payments through stablecoins. Taxing these could plug this gap, providing a timely windfall amid Brazil’s fiscal struggles and missed targets.
This aligns with OECD’s CARF framework for crypto reporting, enabling international data sharing to combat evasion. It could set a precedent for taxing unrealized gains or ending exemptions (e.g., R$35,000 monthly capital gains threshold), as speculated in industry critiques.
Immediate revenue from Brazil’s $42.8 billion H1 2025 crypto volume two-thirds stablecoins could ease budget pressures without broad tax hikes. IOF would add 0.38%–6.38% to cross-border crypto transfers, eroding the low-cost appeal of stablecoins for remittances, dollar hedging, and B2B/B2C payments.
Everyday users, like remittances in LATAM’s largest economy, could see costs rise, disproportionately hitting small investors already facing 17.5% capital gains tax. Expanded reporting effective Nov. 2025 requires foreign exchanges to disclose data, potentially leading to KYC/AML hurdles and slower settlements.
Self-custody wallet movements would also qualify as forex, limiting privacy. Smaller traders may suffer most, as seen in backlash to prior 15–22.5% taxes, sparking debates on offshore migration.
Treating stablecoins as forex prevents “regulatory arbitrage,” ensuring parity with traditional channels and boosting visibility for oversight. Crypto firms must authorize operations by May 2026, potentially consolidating the market around compliant players.
While fostering stability, higher costs could stifle growth in Brazil’s booming sector 20% YoY increase, driving volume to untaxed jurisdictions. Analysts warn of a “crackdown” pushing users underground or abroad.
