Brazil’s Consideration of Taxing Crypto Cross-Border Payments
Brazil’s Finance Ministry is contemplating expanding its financial transaction tax to encompass certain cross-border payments made using digital assets, according to Reuters. Effective from February, Brazil categorizes stablecoin transfers as foreign exchange transactions, a classification that also applies to international payments involving digital assets and transfers to self-custody wallets.
While capital gains from crypto trades exceeding certain thresholds have been taxable in Brazil, crypto-based payments remained untaxed until now. This omission has opened the door for individuals or entities to use cryptocurrencies in activities such as money laundering or underreporting import tax declarations.
“I believe that money laundering is somewhat of an exaggeration,” noted Joel Hugentobler, a Cryptocurrency Analyst at Javelin Strategy & Research. “Ultimately, what the government targets are likely businesses who aren’t laundering money but may be underreporting their numbers.”
A Revenue Boost for Brazil
While these concerns hold merit, taxing crypto transactions could also provide a notable revenue boost for Brazil. The country’s crypto market has surged in recent years, driven significantly by increased stablecoin usage.
Tax data revealed that crypto transactions amounted to 227 billion reais (approximately $42.8 billion) in the first half of 2025, marking a 20% year-over-year increase. Tether’s USDT stablecoin dominates this volume, accounting for about two-thirds of all transactions, while bitcoin represents around 11%.
“The regulation is a double-edged sword,” Hugentobler said. “While regulations are necessary to foster adoption and use cases, excessively strict rules could cause businesses to revert to traditional methods. This scenario seems unlikely in the near term but overly stringent regulations might negate the revenue benefits.”
Enhancing Financial Inclusion
Beyond cross-border payment efficiency, stablecoins have gained traction in many regions due to their substantial contribution to financial inclusion. In areas experiencing currency instability, leading U.S.-dollar-backed stablecoins like USDT and Circle’s USDC offer a more dependable alternative.
This reliability has made stablecoins far more viable for payments than other cryptocurrencies such as bitcoin or Ether. Brazil’s central bank found that these stablecoins were primarily used as an inexpensive way to hold and spend USD in the region.
Central bank officials believe that taxing transactions would provide greater transparency into digital asset usage and help prevent misuse. However, the proposal still requires approval from Brazil’s federal tax authority.
“Brazil is one of the world’s largest stablecoin markets by transaction volume,” Hugentobler observed. “This could become a case study for countries implementing FX-type regulations on stablecoins.” Nonetheless, he added that accepting stablecoins is progress, and as long as businesses comply with regulations without facing excessively high fees, it should support longer-term growth.
