Brazilian Congressman Challenges Lula’s Crypto Tax Plan

Brazilian Congressman Gustavo Gayer has introduced a legislative decree to halt President Lula’s administration’s plan to implement new tax regulations on investments, including the elimination of tax exemptions for cryptocurrency holdings up to R$ 35,000.

Gayer’s proposal follows the Executive branch’s recent introduction of Provisional Measure 1.303/2025, which modifies several existing tax collection rules. Many of these changes are scheduled to take effect in 2026.

The decree aims to “suspend the effects of Provisional Measure No. 1.303, of June 11, 2025, which provides for the taxation of financial investments and virtual assets in the country, and provides other measures,” according to the document.

Congressman Argues Lula’s Crypto Tax Plan Has “Grave Constitutional Flaws”

Gayer argues that Article 62 of the Brazilian Constitution prohibits tax changes through provisional measures.

“By establishing taxes without prior legislative authorization, the MP exceeds the Executive’s authority and violates the principle of tax legality, which requires that taxation always be preceded by legislative approval. Furthermore, Article 62 of the Constitution also limits the Executive’s power to issue Provisional Measures, restricting it to situations of relevance and urgency, and requiring that they do not involve the creation of taxes without proper legislative authorization,” the congressman stated.

He also claims that the Lula administration’s plan to tax cryptocurrencies is flawed because the market is still under development, creating legal uncertainty.

“The regulation of an emerging market, such as digital currencies, requires a deeper analysis of the fiscal, economic, and social impacts, and approval through a regular legislative process, with the participation of stakeholders, is essential to avoid possible distortions in the country’s fiscal policy,” Gayer added.

Gayer’s proposal is supported by an amendment from Congressman Eros Biondini, who has requested the removal of all mentions of cryptocurrencies from the Provisional Measure.

Mixed Congressional Committee Formed to Review the Measure

The deadline for submitting amendments to the Provisional Measure was Tuesday, June 17th.

The next step involves the creation of a joint committee of deputies and senators to review the MP. Subsequently, the Plenary of the Chamber of Deputies and the majority of Senators must approve it.

If approved, the measure will become law and take effect in Brazil, a prospect that many investors are watching with concern.

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