Brazil reversed MP 1,303/2025 to protect the Bitcoin market, suspend new taxes, and sparked the debate about government financing and the reform industry.
The Chamber of Deputies of Brazil has pulled Provisional Measure (MP) 1,303/2025 off its legislative agenda, which makes the bill invalid and stops planned tax changes on Bitcoin and other digital assets.
The financial policy would have increased capital gains tax and new taxes, which would greatly affect the cryptocurrency market and online gambling activities.
Its dismissal indicates a great resistance by legislators and maintains competitiveness in the new crypto industry.
The deadline on whether to approve or not the measure passed without the Senate voting owing to the decision by the Chamber. The MP had been justified by the government, as part of the fiscal balance target of 0.25% primary surplus that Brazil needs in 2026.
The bill anticipated further revenues of R$17 billion regardless of various amendments that diluted the effect, including the elimination of increased taxes on internet sports betting.
Unexpected Backlash and Fiscal Consequences
The defeat of the bill received mixed reactions. The chair of the joint committee that considered the MP Senator Renan Calheiros was lamenting about the result of the Chamber and the verdict he described as being very bad with regard to the finances of the people.
The move was hailed as a denial of new taxes by the opposition voices, which demanded that the government optimize its spending on the people and reform its structure instead of increasing taxes.
The government threatened to block up to R$10 billion of parliamentary amendments in response to the decision made by the Chamber.
The head of finance, Randolfe Rodrigues, pointed at the wide range of fallback options but did not provide details.
The reversal is in the context of broader discussions of Brazil’s fiscal policy and cryptocurrency taxes.
The scrapped plan would have terminated crypto tax breaks, so a flat tax of 17.5% on capital gains would have been imposed, which would have especially hit small investors who used to enjoy a tax-free exemption. The repeal can therefore ensure a better climate for casual traders and the crypto market in general.
Market Survival and Future Outlook
The legislature of Brazil has evaded the introduction of taxation pressure that would negatively affect the investment in Bitcoin and its development in the country by voting against MP 1303/2025.
The ruling keeps Brazil at the lead in crypto innovation over other states that charge stricter taxes.
Meanwhile, it also puts constant strain on the government to identify other fiscal policies to achieve budget goals by 2026 without damaging nascent digital asset industries.
Fiscal responsibility versus competitiveness in the market is one of the major issues in the changing Brazilian economy.