Brazil's Special Department of Federal Revenue will start gathering information from foreign cryptocurrency exchanges to ensure their operations comply with local laws, as reported by Reuters on June 18.

The tax department will request foreign crypto exchanges to disclose how they interact with local service providers and ensure these exchanges provide details required by regulations established in 2019.

Deputy Secretary of Inspection Andrea Chaves stated:

“It’s important for us to first understand how [the foreign exchanges] operate here and determine if there are any illegal activities.”

Chaves also mentioned that the tax department will collect information about Brazilian assets that should be taxed.

An ordinance summoning foreign exchanges is expected to be issued by the tax department before the week ends. Unlike local Brazilian exchanges, foreign companies are not required to report transactions.

Reuters identified Binance, Coinbase, OKX, and KuCoin as some of the foreign exchanges operating in Brazil, though the list is not exhaustive.

Rising Crypto Activity in Brazil

According to data from the tax department cited by Reuters, there has been an increase in reported crypto amounts by individuals and legal entities over the past year, reflecting rising activity in the country.

Tax reporters declared 133.6 billion reals ($24.6 billion) in crypto during the first half of 2023, including 14.5 billion reals ($2.7 billion) on foreign exchanges. These figures represent 36.6% and 51.2% growth in each category compared to the first half of 2022.

The tax department plans to release updated data through a technological update.

Additional data also indicates growth. In a May research report, Kaiko Research found that crypto trading volume involving the Brazilian real reached $6 billion between January and early May 2024.

This $6 billion volume represents a 30% increase from the previous year and surpasses US dollar trading volumes. Kaiko's recent data also shows that Brazil is the largest crypto market in Latin America and the seventh-largest fiat currency market globally.