The Brazilian government is weighing a new tax on cryptocurrency transactions as a possible alternative to raising the existing Financial Operations Tax (IOF). This proposal has emerged amid broader discussions on tax reform, which in recent days have sparked widespread public backlash.
Changes implemented on May 22 raised the IOF rate, triggering criticism from both citizens and financial experts. Lawmakers are now exploring ways to reduce the impact of this measure — and one option on the table is to expand the tax base to include digital assets.
Government Debate: Can Crypto Be a New Source of Revenue?
The idea was floated by Chamber of Deputies President Hugo Motta, who stated in a public address that further tax hikes on traditional financial transactions would be unacceptable for the Brazilian people. However, he suggested that taxing crypto operations could be a viable alternative.
Motta emphasized that this is not yet a confirmed decision — rather, it’s a proposal under consideration. The suggestion quickly drew reactions from Brazil’s crypto sector, with mixed opinions from experts and industry players.
Legal Experts Warn of Potential Constitutional Issues
According to Vanessa Butalla, VP of Legal, Compliance, and Risk at Mercado Bitcoin, applying IOF to crypto transactions would be legally unsound. She argued that cryptocurrencies are not treated the same way as assets traditionally subject to IOF, such as loans or currency exchanges. “It would be like applying IOF to an investment property,” she said.
Lawyer Daniel de Paiva Gomes also warned that expanding the tax base through an executive decree would be unconstitutional. “Only legislation passed by the National Congress can redefine what constitutes a taxable event,” he explained, adding that the government can only set rates and timeframes — not change the legal definition of taxable assets.
Mixed Reactions and Uncertain Future
While some policymakers support the proposal as a way to distribute the tax burden more broadly, Brazil’s crypto community fears it could hinder adoption and slow down digital finance innovation in the country. In the coming weeks, the government will need to decide whether to pursue this idea or drop it altogether.
Though the outcome remains uncertain, one thing is clear: cryptocurrencies are increasingly becoming a central issue in Brazil’s public fiscal debate.
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