Brazil Eyes Tax on Cross-Border Crypto to Close FX Gap

• Brazil plans to apply the IOF financial transaction tax to cross-border crypto transfers.
• The move aims to close a loophole where stablecoins like USDT bypass foreign exchange taxes.
• Crypto volume hit $42 billion in H1 2025, with stablecoins driving two-thirds of activity.

Brazil is moving to close a multi-billion dollar loophole in its foreign exchange market. The Finance Ministry is preparing to apply the IOF tax (Financial Transaction Tax) to cross-border crypto transfers. This targets stablecoins like USDT, which are increasingly used to bypass traditional FX taxes.

While sources told Reuters that the move is primarily regulatory rather than punitive, it could meaningfully increase public revenue at a time when fiscal targets are under massive pressure.

Related: Brazil Introduces Sweeping Crypto Rules, Caps Unapproved Transfers at $100K

Why Stablecoins Are the Primary Target

The country’s crypto ecosystem has experienced explosive growth, with stablecoins such as USDT dominating transactions. According to federal tax authority figures, crypto transaction volumes reached 227 billion reais ($42 billion) in the first half of 2025, a 20% jump from the previous year.

Nearly two-thirds of this activity involved USDT trading alone. On the other hand, Bitcoin accounted for just 11% of domestic trading. Regulators argue that stablecoins have been used extensively for payments rather than investment.

Related: US Shutdown Ends: XRP, Chainlink ETFs Back on Track as Crypto Regulation Resumes

The central bank’s new regulatory framework, which takes effect in February, will reclassify stablecoins and certain virtual asset operations as foreign‑exchange transactions. The change applies to international payments with crypto, transfers linked to card usage, and the movement of assets to or from self‑custody wallets.

By bringing these activities within the scope of foreign‑exchange rules, Brazil wants to ensure that stablecoins do not sidestep traditional FX markets. Federal Police officials have warned that crypto‑based imports are causing the government to lose more than $30 billion annually.

New Rules Treat Crypto Transfers as FX Operations

This tax proposal aligns with a broader regulatory overhaul. As Chainalysis reported, Banco Central do Brasil issued Resolutions 519, 520, and 521, which brings an entirely new structure for crypto service providers.

Under these rules, custodians, exchanges, intermediaries, and even foreign firms must secure authorization as SPSAVs and comply with standards covering money‑laundering prevention, disclosures, audits, data protection, and minimum capital requirements of up to R$37.2 million ($7.02 million).

Cross‑border crypto transfers face higher scrutiny under Resolution 521, which subjects stablecoin and virtual asset operations to FX regulations. That means client identification, transaction limits, and monitoring obligations now apply to international payments, transfers involving cards, and movements into or out of self‑custody wallets.

The central bank has stated that nearly 90% of the country’s crypto transfer volume involves stablecoins. To meet these expectations, firms will require advanced on‑chain analytics and risk‑assessment tools.