- Due to several reports of fraud involving cryptocurrencies, the Brazillian tax authority brought new rules that forced several exchanges to shut down.
- The law requires exchanges to report all transactions, or face large fines.
- While the country's authorities are trying to create dedicated regulations for crypto, no such law that would protect crypto businesses exists.
Tax authorities in Brazil recently received support to regulate the digital currency market after multiple reports of fraud emerged last year. Fraud allegations were reportedly tied to multiple platforms, including Zero10, Atlas Quantum, and Trader Group. Now, in February 2020, the results of such fraudulent actions caused a major crackdown.
At least two exchanges have been shut down in Brazil due to threats of major fines under the new regulations. One of the exchanges that were forced to close down the shop is Acesso Bitcoin, while another one is Latoex.
Acesso Bitcoin’s co-founder, Pedro Nunes, commented on the move by saying that the Federal Revenue Service’s new rules significantly impacted the exchange’s trading volumes. He noted that the Brazillian market has ‘cooled off for smaller exchanges,’ which is why Acesso Bitcoin voluntarily shut down.
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The other exchange, Latoex, saw very similar issues. Apart from that, if it refused to shut down, it would have received a 100,000 Brazilian real-large fine.
Brazil keeps struggling to regulate crypto
As some may know, the country currently lacks any dedicated law regarding digital currencies for the moment. As a result, all exchanges operating in the country fall under the purview of Normative Instruction No. 1888, which was issued by the Department of Federal Revenue.
The Instruction requires all firms that are performing crypto transactions to either report them or be fined for not doing so, regardless of the size of the transactions.
Meanwhile, the country’s authorities are trying to come up with proposals that would regulate the crypto industry in Brazil. Both houses of the National Congress of Brazil are relying on a special commission that is analyzing the motion and making the necessary revisions to the Bill.
At the same time, the Senate is reviewing two additional bills (PL 3825/2019 and PL 3949/2019). However, no specific legislation has been enacted as of yet, meaning that there are still no standing regulations for the Brazillian crypto market.