Cryptocurrencies are the main target for taxation by the Lula government and Congress.

Brazil’s Crypto Regulation: A Tax-Focused Approach?

In recent months, discussions surrounding cryptocurrency market regulation in Brazil have intensified. After attending meetings with parliamentarians, Central Bank representatives, and members of the crypto community, a clear pattern emerges: the government’s primary focus is taxation, rather than protecting or stimulating the sector.

While Law 14.478 of 2022, the Legal Framework for Cryptoassets, was a step forward, it’s a law of limited effectiveness. It relies on further regulations to be practical. Until these rules are in place, Brazilian investors remain exposed.

A significant issue is the overlapping of regulations. Several bills are being processed without coordination, leading to conflicting proposals that encroach on the authority of bodies like the Central Bank and the CVM (Securities and Exchange Commission). The proposed stablecoin bill exemplifies this problem.

Global Approaches to Crypto Regulation

While Brazil grapples with these issues, other countries are making progress. They are creating legal certainty and regulatory clarity, attracting capital and innovation. Here are some models that Brazil should consider:

European Union – MiCA

• A common framework for all EU countries.
• Mandatory registration of exchanges.
• Supervised whitepapers.
• Solid rules for stablecoins.

In Brazil, none of this is legally required. The focus remains on taxation. Even within the EU, individual countries retain the autonomy to legislate locally, demonstrating that regulatory decentralization can be effective.

United States – DCCPA and State Autonomy

In the U.S., besides federal projects like the DCCPA, each state can legislate on crypto, fostering innovation, as seen in Texas, Wyoming, and Florida.

Brazil lacks this level of autonomy among its states. The lack of coordination between the federal government, agencies, and parliament only increases legal uncertainty.

Japan – Payment Services Act

• Mandatory segregation between company capital and client assets.
• Mandatory insurance against hacker attacks.

In Brazil, this is still optional. Investors are unprotected, yet the government prioritizes revenue collection over security.

Switzerland – Blockchain Act

• Legal recognition of tokens as legal assets.
• Regulatory sandbox for innovation, including DEXs and smart contracts.

In Brazil, smart contracts lack formal legal support, and there isn’t a specific sandbox for blockchain.

Dubai – VARA

• Creation of a regulatory authority exclusively for virtual assets.
• Licensing with clear rules, technical focus, and speed.

In Brazil, the Central Bank, CVM, and Federal Revenue compete, lacking clarity on who leads the regulation of each asset.

Singapore – Payment Services Act

• Demanding KYC and compliance.
• Stimulating innovation with strong system protection.

In Brazil, KYC is required by regulations, but there is no national standardization or systematic oversight.

The Path Forward for Brazil

Each country has a different view on central bank digital currencies. Including this comparative analysis could help Brazil position itself better.

Low taxation attracts innovation. Countries like Portugal, Switzerland, and Hong Kong have reduced or eliminated taxes, attracting companies and foreign capital.

Brazil needs to move away from the logic of taxing first and organizing later. Taxing cryptoassets without providing legal certainty, investor protection, or stimulating innovation is detrimental to the market’s potential.

The National Congress and the federal government should listen to experts, observe global practices, and act responsibly.