Brazil’s tax regulator, the Department of Federal Revenue, is requiring local cryptocurrency exchanges to report their operations on a monthly basis in order to verify tax compliance and improve the country’s fight against money laundering and corruption.
Brazillian Cryptocurrency Exchanges to Report Monthly Trading Data to Authorities
Citing the examples of Australia and South Korea, the Brazillian authorities announced they will require monthly reports from local digital currency exchanges from now on.
The document points to a significant increase of cryptocurrency trading in Brazil. In 2017, the number of user accounts on crypto operators surpassed the number of user accounts registered on the Sao Paulo stock exchange.
Annual Bitcoin trading volume has jumped from 44.8 million BRL ($12.12 million at current rates) in 2014, to 113 million BRL ($30.57 million) in 2015. Volumes only got larger in 2016 (363.2 million BRL or $98 million at current rates) and 2017 (8.3 billion BRL, which is $2.25 billion at current rates).
It is important to note that the value of the country’s currency has fallen by approximately half throughout that period and the value of Bitcoin reached its all-time high in late December 2017, around the $20,000 area.
Daily trading volumes on Brazil’s largest digital currency exchanges, registered on July 10, 2018, also reveal a substantial cryptocurrency market. Mercado Bitcoin daily volume was of 3.1 million BRL ($840,000), with Foxbit reaching 1.2 million BRL, and Bitcointrade reporting 2.2 million BRL ($600,000). BrasiliEX and Bitcointoyou facilitated the trading of 790,000 and 974,000 BRL in one day, respectively, which is $213,000 and $263,000.
The document also points out that currency trading operations are subject to capital gains tax, at progressive rates based on the amount realized: 15% on an amount not exceeding BRL $5 million up to 22.5% on an amount that is at least BRL $30 million or more. Money laundering and corruption is a concern, especially now that Brazilians have just elected Jair Bolsonaro for President, a populist who pledges to end corruption.
“With the imposition of an ancillary obligation for exchanges to provide information on the purchase and sale of crypto assets, we seek to verify tax compliance, as well as to improve the fight against money laundering and corruption, and increase the perception of risk in taxpayers who intend to avoid taxes.
In Australia, exchanges are obliged to report users’ identities for anti-money laundering purposes and to fight the funding of terrorism. In South Korea, tax authorities have collected the equivalent to 24 percent of cryptocurrency exchanges’ revenues in tax. The regulator requires segregated accounts and KYC processes.
Brazil’s main regulatory authority, the CVM, has released a comprehensive document that offers guidance to fund managers looking at adding cryptocurrencies to their portfolios. The documents warn of illegal operations relating to money laundering, fraud, and price manipulation.
The regulator recommends fund managers to only use regulated cryptocurrency operators and independent auditors. The agency also published a circular providing guidance to help managers detect and avoid fraudulent digital assets.
Featured image from Shutterstock.
The post Brazil Tax Authority Orders Crypto Exchanges to Provide Monthly Reports appeared first on NewsBTC.