On Monday, the Brazil government revealed plans to investigate the operation of international crypto exchanges in the region. The proposed investigation will involve assessing the operation and compliance of these foreign exchanges.
The Receita Federal do Brasil is expected to publish a report this week requesting foreign crypto exchanges provide information about their operations in Brazil. The report states that foreign exchanges will be required to outline their business practices, customer engagement, and compliance with the existing law.
Brazil’s Request For Information from Foreign Exchanges
The regulators expect foreign exchanges to disclose customers’ details, transaction history, and other related activities in Brazil.
According to Reuters, the information obtained from foreign exchanges will enable the Brazilian regulators to identify illegal activities and noncompliance with the law.
Also, the regulator will use this information to develop comprehensive regulations for crypto assets in Brazil.
Lately, Brazil has witnessed a growing adoption of crypto assets. According to Kaiko, the crypto activities in Brazil increased by 30% between January and May of this year. This implies that crypto activities play a significant role in stimulating economic growth in Brazil.
Currently, Binance, OKX, KuCoin and Coinbase are ranked among the best-performing crypto exchanges in the region.Binance boasts of holding one of the largest markets in Brazil, supporting around 79% of crypto transactions.
Brazil Regulators to Assess Compliance of Foreign Exchanges
An announcement conveyed by the deputy secretary of inspection at Receita Federal, Andrea Chaves, explained the significance of the foreign exchange to disclose vital information on their operation in the region.
The executive believes that this information will enable regulators to examine whether Brazilians comply with the new tax regulation. Chaves confirmed that summoning foreign exchange will ensure that crypto activities in the region are legitimate and compliant with the law.
In support of Chaves’ remark, Wagner Lima, the revenue service risk management officer, explained the need to revisit the relationship between foreign exchanges and local crypto service providers.
The executive stated that, in accordance with existing rules, information sharing plays a significant role in restoring Brazil’s financial integrity. In May, the Brazilian central bank revealed a plan to regulate crypto assets in phases.
The country’s apex bank confirmed that the proposal to regulate the crypto industry will be released by year end. In 2022, Brazilian regulators greenlighted the crypto assets Act, which outlined the three preliminary stages for regulating the digital sector.
The bill highlights the procedure for providing digital assets and the regulatory process for monitoring local and foreign exchanges.
Reviewing Brazil Rule-Making Process for Crypto Assets
In December, the Brazilian authorities engaged in a public consultation to gather feedback from the Brazilians concerning the Crypto Assets Act. Guided by the rule-making process, the Brazil government plans to launch a second consultation in June.
The public consultation will enable the legislators to gather information from the community and identify areas left out in the 2022 Crypto Asset Act. After the public consultation, the Brazilian authorities will carefully review the proposal for crypto regulation.
Like other countries, Brazil’s government is developing clear regulation for digital assets. Last year, legislators approved new taxation rules for digital assets. The new rule requires Brazilian nationals to remit 15% taxes on the profit and dividends generated from crypto activities.
With the new tax regime, the Brazil government plans to expand its revenue stream year over year. By year end, it anticipates collecting revenue amounting to around $4 billion from crypto activities.
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