Brazilian exchanges are facing crypto transactions tax regulations. Currently, all transactions on Brazilian exchanges must be reported to the Department of Federal Revenue of Brazil (RFB). Exchanges that fail to comply with this obligation will face fines and penalties.
17 February, 2020 | AtoZ Markets – Brazilian lawmakers got support to regulate the crypto market following allegations of fraud from Atlas Quantum, Zero10 and Trader Group last year. Two big crypto exchanges based in Brazil had been closed following threats of heavy fines and the immediate effects of the new regulations. Tax regulations implemented even before the adoption of specific legislation hit the Brazilian cryptocurrency exchanges.
Brazilian Exchanges Must Report to RFB
Brazil does not have a particular law to deal with crypto at present. All exchanges are under the purview of Normative Instruction No. 1888 issued by RFB. The subsidiary law was published in May and entered into force on August 1, 2019.
Brokers and non-compliant companies that present inaccurate information will be fined. All companies who are carrying out crypto transactions in Brazil must report RFB. Those companies which fail to comply will face a penalty ranging from 500 BRD to 1500 BRD, or 120 to 360 USD. But even without penalties, compliance requires additional investments because the entire sector is trying to adapt to the new regulations.
The two houses of the National Congress of Brazil are examining proposals to regulate the country’s crypto industry. The main draft so far, Bill 2303/2015, which presented to the Chamber of Deputies almost five years ago. However, the bill archived in 2018 and then put back on the agenda in March 2019. A special commission is currently analyzing and revising the bill.
Meanwhile, the Senate is considering two other bills, PL 3825/2019 and PL 3949/2019. Both bills aim to implement regulations for brokers in digital assets and investor protection measures. As of February 2020, no specific legislation had enacted to establish rules for the crypto market in Brazil.
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Tax Regulations Hit Brazilian Crypto Exchanges
Tax rules hit Brazilian crypto exchanges, forcing the trading platforms Acesso Bitcoin and Latoex to close. One of the affected exchanges, Acesso Bitcoin, says that the current situation created by the new regulations is the main reason for its decision to cease trading. Its co-founder Pedro Nunes also said:
After the introduction of these rules by the Federal Tax Service, we saw a significant drop in the volume of trade. We also have the feeling that the market has cooled down for the small exchanges.
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