Stablecoin Tether (USDT) has witnessed a remarkable surge in adoption within the Brazilian cryptocurrency landscape, constituting a staggering 80% of all digital currency transactions in the nation, as per data from Brazil’s revenue service agency.
As of mid-October, the total USDT transactions in Brazil for the current year have amounted to approximately $271 billion Brazilian reais, equivalent to nearly $55 billion USD. This figure is nearly double the volume of Bitcoin (BTC) transactions within the country, which amounted to around $151 billion Brazilian reais, roughly $30 billion USD. Stablecoins are a class of cryptocurrencies crafted to maintain a stable value, often tied to the worth of fiat currencies, such as the U.S. dollar and the Brazilian real.
The ascent of USDT transactions in Brazil commenced in 2021, with a significant milestone reached in July 2022 when it surpassed the volume of Bitcoin transactions. This occurrence coincided with the tumultuous period within the cryptocurrency industry last year, marked by the collapse of crypto lenders Three Arrows Capital and Voyager Capital.
Crypto winter had a substantial impact on transaction volumes in Brazil, leading to a nearly 25% decline in 2022, culminating in $154.4 billion Brazilian reais, approximately $31 billion USD, as reported by the government.
Brazil’s tax authority employs a sophisticated system driven by artificial intelligence and network analysis to monitor crypto-related activities among its citizens. This system is not only adept at identifying suspicious activities but can also pinpoint the locations of individuals engaged in cryptocurrency trading.
Additionally, the revenue agency is now extending its focus to Brazilians’ crypto investments held overseas. On October 25, the local Congress passed legislation acknowledging cryptocurrencies as “financial assets” for tax purposes regarding foreign investments. Starting from January 2024, earnings abroad ranging from 6,000 to 50,000 reais, which equates to around $10,000 USD, will be subject to a 15% tax rate. Beyond this threshold, taxes will be levied at a rate of 22.5%.
Since 2019, crypto exchanges operating in Brazil have been mandated to report all user transactions to the government. Capital gains from cryptocurrency sales that exceed 35,000 reais, approximately $7,000 USD, per month are subject to a progressive tax bracket ranging from 15% to 22.5%.
Notable global crypto exchanges, including Coinbase, Binance, Bitso, and Crypto.com, operate within the country alongside local players like Mercado Bitcoin and Foxbit.