Brazil summons top crypto exchanges to clarify their services

As Brazil continues to mark its territory in the global cryptocurrency industry, it’s pulling up its socks and calling out big names like Binance, Coinbase , OKX, and KuCoin. These exchanges are being asked to spill the beans on how they conduct their operations and handle collaborations with local service providers, especially in tax matters.

Unlike local exchanges, they haven’t been bound by Brazilian regulations to report their activities. The buzz started when Brazil’s tax authority flagged this as urgent. Andrea Chaves, deputy secretary of inspection at Brazil’s Federal Revenue Service, pointed out:

It’s an area of concern for us to understand first how they operate here, whether there’s any illegality or not. We are also concerned about having information on Brazilian wealth subject to taxation here.

Wagner Lima, the revenue service’s risk management coordinator, echoed this sentiment. She said the government wants to understand how these foreign entities are syncing up with local service providers under the regulations set back in 2019.

The scrutiny isn’t just coming out of the blue. There’s been a huge upswing in the crypto market within Brazil. From January to July 2023, Brazilians transacted a whopping $24.6 billion in crypto, a 36.6% jump from the previous year’s figures during the same period. Notably, $2.6 billion of this was via foreign exchanges, which itself saw a 51.2% increase compared to 2022.