Brazil’s government is pushing to broaden its cryptocurrency taxation by targeting international transfers made with stablecoins and other digital assets. The proposal would bring these transactions under the IOF financial transaction tax, capturing payments that so far were not taxed. Officials argue this step is necessary to close a growing gap in revenue as crypto inflows surge in the country. By subjecting these flows to IOF, authorities aim to monitor and tax operations that move outside the traditional banking system.

The tax reform is driven by a remarkable increase in crypto volume. In early 2025, transaction volume reportedly reached 227 billion reais, equivalent to about $42.8 billion, marking a 20 percent year-on-year increase. Authorities warn that many cross-border payments made in stablecoins effectively escape standard foreign exchange taxation, creating a blind spot in fiscal controls. Extending the IOF to these transfers could generate significant new revenue while strengthening oversight.

Brazil Seek Expanded Judicial Power Over Crypto

Simultaneously, a draft law proposes to give authorities new tools to seize digital assets. The bill, dubbed an “anti-faction” measure, would authorize the early liquidation of seized crypto even before a final conviction, as a tool to combat organized crime. Proponents believe this measure would disrupt criminal networks by allowing seizures and rapid sale of assets. Critics raise concerns about property rights, due process protections, and potential abuse of power if assets are sold in a depressed market.

These reforms build on a broader legal framework established in 2022. Under that regime, Brazil defined crypto assets clearly and assigned oversight responsibility to its central bank and other agencies. New rules expected in February 2026 would classify fiat-pegged stablecoins used in exchanges or payments as foreign-exchange operations. That reclassification paves the way for imposing IOF tax and tighter controls on cross-currency digital flows.

For investors, exchanges, and everyday users, the proposals carry profound implications. Crypto firms may face strict licensing demands, transaction caps, and enhanced reporting requirements. Wallet users could endure more scrutiny on counterparties and transaction sizes. If enacted, the reforms could reshape how digital assets are held and transferred in Brazil while signaling a shift from innovation-friendly regulation toward a more enforcement-centered regime.

Stakeholders await a decisive legislative vote. Debate continues around sunset clauses, appeal rights, and audit mechanisms that ensure fairness while empowering enforcement efforts.