The Brazilian tax authority, Receita Federal do Brasil (Federal Revenue of Brazil), is taking a significant step to ensure tax compliance in the cryptocurrency space. According to a recent report, the authority will publish an ordinance this week summoning foreign cryptocurrency exchanges to provide information on their operations in Brazil and potential tax liabilities of Brazilian citizens.

The move is aimed at understanding how foreign exchanges operate in the country and identifying any potential illegality or tax evasion. The authority is particularly interested in obtaining information on Brazilian wealth subject to taxation, as the country has recently introduced a 15% income tax on cryptocurrency profits and dividends earned on foreign exchanges.

The ordinance will likely affect top cryptocurrency exchanges such as Binance, Coinbase, OKX, and KuCoin, which operate in Brazil. Binance, in particular, has a significant market share in the country, accounting for 79% of all transactions. However, it has lost some ground to local exchanges Mercado Bitcoin and Mexico-based Bitso in recent months.

Brazil has seen a significant increase in cryptocurrency trading activity in 2024, with a 30% year-on-year increase to $6 billion between January and May. The country is also the largest market player in Latin America and the seventh-largest worldwide in terms of fiat currency trade, with stablecoin transfers being the main source of cryptocurrency activity.

The Brazilian tax authority's move is part of a broader effort to regulate the cryptocurrency space and ensure tax compliance. The authority aims to collect around $4 billion (20 billion Brazilian reals) in the 2024 financial year from cryptocurrency taxes.

In conclusion, the Brazilian tax authority's decision to summon foreign cryptocurrency exchanges for information marks a significant step in ensuring tax compliance in the cryptocurrency space. The move is likely to have a significant impact on the industry, and it will be interesting to see how exchanges respond to the ordinance. As the cryptocurrency market continues to evolve, it's essential for authorities to stay vigilant and adapt to changing trends and sentiments.