Brazil implements a new tax on cryptocurrencies and plans to adopt Bitcoin as part of its reserves.
Brazil has entered a new phase in regulating the cryptocurrency market, with a fixed capital gains tax of 17.5% on all transactions related to digital assets coming into effect since June 12, regardless of the value or number of transactions.
This measure is part of temporary measure number 1303, which was approved by the federal government to enhance financial revenues from the rapidly growing cryptocurrency sector.
The new tax system includes cryptocurrencies stored in self-custody wallets, in addition to digital assets held outside Brazilian borders.
The law requires investors to report their profits from cryptocurrencies to tax authorities quarterly, with the possibility of offsetting losses incurred over the previous five quarters, and this period will be reduced starting in 2026 to become stricter in monitoring profits and losses.
Before the implementation of this system, traders could sell up to 35 thousand Brazilian reais per month (equivalent to about $6,300) in cryptocurrencies without paying taxes.
Now, the previous exemption has been abolished and the tax has been changed to a flat rate of 17.5%, increasing the tax burden on small traders while slightly reducing the tax for large investors conducting bigger transactions.
Brazil is one of the leading markets for cryptocurrencies in Latin America and among the top ten countries in the world in terms of cryptocurrency adoption. The Brazilian government aims to expand the integration of these assets into the formal economic system, having introduced a bill last March allowing employees to receive part of their salaries in cryptocurrencies.
The legislation stipulates that at least 50% of salaries must be paid in the national currency, the 'Brazilian real', while allowing remote workers or expatriates to receive their full wages in cryptocurrencies, under the supervision of the central bank. The law also requires employers to provide educational materials about cryptocurrencies, their risks, and ways to protect against fraud.
On a broader scale, Brazil is discussing another bill that allows the government to allocate up to 5% of the public treasury reserve, amounting to about $370 billion, for investment in Bitcoin. This project aims to diversify the national reserve and enhance the role of digital currencies as a sovereign hedging tool.
If this law is passed, Brazil will be the first country in the G20 to adopt Bitcoin as an official part of its sovereign reserves through parliamentary legislation, rather than through executive decisions, representing a historic step in the global adoption of cryptocurrencies and enhancing their financial legitimacy.
