Brazil's Receita Federal is stepping up its oversight of foreign digital asset exchanges operating within its borders. The tax authority is mandating that these platforms disclose their operational methods and customer services to ensure compliance with local tax laws and anti-money laundering regulations.

Increased Scrutiny

The decision comes as digital asset usage in Brazil surges, with reported crypto holdings by Brazilians reaching 133.6 billion reais ($24.6 billion) from January to July 2023. This represents a significant 36.6% increase from the previous year. The oversight is crucial as the government pushes for enhanced transparency while still developing a concrete regulatory framework, which is anticipated to be proposed by the end of 2024.

Auditing International Crypto Platforms

The Receita Federal will audit international crypto platforms to verify that they comply with tax obligations and do not engage in illegal activities. The government aims to ensure that the services offered to Brazilian customers are entirely legal and that local regulations are not circumvented. This comes amid concerns that some platforms could facilitate illicit financial flows.

Collaborations and Information Sharing

The scrutiny will also focus on collaborations between foreign exchanges and local service providers. This ensures compliance with a 2019 regulation that mandates information sharing, which is crucial for maintaining the integrity of Brazil's financial systems.

Ordinance Requirements

The upcoming ordinance will require exchanges to provide extensive details about their operations but will exclude customer-specific data and transactional information, adhering to current Brazilian laws. The increase in declared holdings through foreign exchanges, which saw a 51.2% jump from the previous year, underscores the growing significance of these platforms in the local market.