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Brazil follows IMF guidelines for Crypto classification

Brazil follows IMF guidelines for Crypto classification

The Central Bank of Brazil classifies buying and selling of cryptocurrencies as buying and selling of assets in accordance with the IMF guideline. 

August 27, 2019 | AtoZ Markets – The announcement was made in the press release by the Central Bank of Brazil stating that traded cryptocurrencies will be classified as non-financial products and will be accounted like assets. However, the guidelines of the International Monetary Fund (IMF) also declares crypto assets as non-financial assets.

A document by the Statistics Department of International Monetary Fund (IMF) which is titled as “Treatment of Crypto Assets in Macroeconomic Statistics” states that:

“Crypto-assets did not exist when the latest revision of the macroeconomic statistical manuals took place, consequently no international guidelines are available, except a reference in the Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG) clarifying that Bitcoin-like crypto assets are nonfinancial assets. Crypto assets combine properties of currencies, commodities, and intangible assets. This should guide their classification in macroeconomic statistics. ”

Central Bank of Brazil positive reactions for crypto assets

Brazil’s central bank already published a report on August 26, 2019, which summarized the situation of the crypto assets in Brazil. The paper explained that an advisory body on external sector statistics methodology to the IMF Statistics Department recommended classifying the trading of cryptocurrency and tokens as assets. This means that it is compiled into the balance of payments asset account. Thus, the cryptocurrency mining activity is now treated as a productive process. 

Moreover, the Central Bank of Brazil will consider the trading of cryptocurrency as export and import statistics as there are mix reactions about the Central bank’s classification of crypto assets.

Joao Canhada, the co-founder of FoxBit, quoted that: “The central bank has been at the forefront of great initiatives to meet and talk with the market in recent years, this opening is starting to pay off, this step today brings more legal certainty to the sector and more confidence to the legacy market about the seriousness of this new market. market, a giant evolution in the regulator’s understanding in addition to showing the market that Brazil’s central bank is aware of the innovations and evolution of the local cryptocurrency ecosystem.”

Read more: Brazil resort to Blockchain to rescue the economy

Cryptos future is bright

Crypto assets and blockchain is at their initial phase of development and undergoing fast changes and it difficult to predict to which side it will go in future. But good signs are that countries are adopting crypto businesses and can predict for a bright future.

The resulting output is owned by an institutional unit and can be transferred from one institution to another by engaging in market transactions. Also, crypto holders do not have any claims on other institutional units. These characteristics support the recommended classification of BLCAs as produced nonfinancial assets.

Thiago Lucena, the CEO of Uzzo also commented that:

“What happened was the inclusion of cryptocurrencies in the Balance of Payments, reinforcing the classification as an asset. The problem is that once classified as a product we have to declare the importation of cryptocurrencies through exchange contract, thereby increasing bureaucracy, levying taxes and consequently the cost of the transaction.”

The central bank explained that as purchase and sale of crypto assets involves the execution of foreign exchange contracts. It will also consider selling and buying of crypto assets as the export and import statistics of goods.

Brazil has been a net importer of crypto assets which has contributed to reducing the trade surplus in the balance of payments goods account.

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.