Companies that work with cryptocurrencies oppose the collection of the Financial Operations Tax (IOF) on their transactions. After the government increased the tax rate, the possibility of digital currencies — especially the so-called stablecoins, which have value tied to traditional currencies like the dollar — being used to circumvent the tax became a concern. Representatives of the financial sector consequently began to advocate that this type of asset should be taxed with IOF. However, crypto assets believe that it would not even be legally valid to do so.
Daniel de Paiva Gomes, partner at Paiva Gomes Advogados and advisor to the Brazilian Association of Cryptoeconomy (ABcripto), states that the collection of IOF on crypto assets would be illegal, as any tax can only be required based on law. A government decree, such as the one recently issued to increase the tax, could only define rates and collection deadlines. 'Only a law approved by the National Congress could change the definition of the taxable event to include a new class of assets as taxable,' he asserts.
The controversy began after Mário Mesquita, chief economist of Itaú, stated that to compensate for the loss of revenue with the government's retreat on the increase of IOF for funds, the Executive could tax crypto assets and sports betting with the tax. 'The ideal would be not to have IOF, but it does not seem to make sense to leave this segment exempt given that it will tax others,' he declared, referring to cryptocurrencies.
Paiva explains that there is no exemption on crypto assets because any exemption must come from an explicit text and assumes that the tax would naturally apply if it were not exempt. 'Article 3 of the Crypto Assets Framework (Law 14.478/2022) states that virtual assets do not include national currency, international currency, securities, and financial assets. Therefore, there is no way to have IOF,' he assesses. For the lawyer, even if the Central Bank (BC) includes operations with stablecoins in the foreign exchange market, as it has already proposed in public consultation No. 111, this would not automatically reflect in the incidence of IOF, because including an operation in the foreign exchange market does not mean that this operation will be considered a foreign exchange contract for legal purposes.
Emmanuel Abrantes, tax partner at Lefosse Advogados, argues that the only situation in which IOF could be charged on operations with cryptocurrencies currently would be when crypto assets are used to disguise a foreign exchange operation. Abrantes states that a company that buys US Treasury bonds or shares of large US companies from another company in reais and then sells these assets to receive dollars abroad is already subject to a fine from the Federal Revenue. 'If there is fraud to avoid the IOF, then the tax indeed applies. It cannot be said that no operation with crypto assets or stablecoins should be taxed with IOF; it depends on how it is structured,' he explains.
However, Fabrício Tota, director of new businesses at the cryptocurrency exchange Mercado Bitcoin (MB), asserts that the idea that stablecoins are primarily used today to disguise foreign exchange operations and facilitate tax evasion is a myth. 'To this day, 93% of people who bought or sold stablecoins at MB did not even make a withdrawal for self-custody in a digital wallet. It is a smart exposure to the dollar. The use is not to take money to send abroad, but rather to invest in that asset,' he comments.
Lorena Botelho, partner at Urbano Vitalino Advogados, points out that legislators need to consider the heterogeneity of the market, as there are stablecoins designed solely for payments, while others offer financial returns and can be classified as securities. 'If this understanding prevails, any transaction with stablecoins, such as USDT and USDC, could be taxed at the applicable IOF rate for foreign exchange transactions. The regulatory risk, which until now was seen as remote, becomes more tangible — and calls into question how Brazil intends to deal with the increasing digitalization of the financial market,' she warns.
Within MB, Vanessa Butalla, vice president of legal, compliance, and risks of the exchange, states that crypto assets are treated as goods by the IRS, so they would not be subject to the collection of a tax for financial operations. 'It would be like deciding to charge IOF on a property purchased for investment,' she compares.
Butalla states that MB is talking with the Brazilian Association of Fintechs (ABFintechs) and other committees to try to convince legislators not to accept such a measure, as she sees a very rapid advancement in the legislative debate to tax crypto assets. The president of the Chamber of Deputies, Hugo Motta (Republicans - PB), has already suggested taxing cryptocurrencies as one of the ways to compensate for IOF.
