Brazil’s Tax Authority Plans to Summon Binance, Coinbase, OKX, and KuCoin to Understand Operations and Investigate for Illegal Activities
While Brazil’s first crypto regulations are being developed, foreign crypto exchanges operating in the country are not required to report transactions.
- Brazil’s tax authority will summon Binance, Coinbase, OKX, and KuCoin to understand their operations.
- Foreign crypto exchanges in Brazil aren’t required to report transactions, raising tax evasion concerns.
- Brazil’s crypto trading surged 30% in early 2024, with BRL volume reaching $6 billion, making it the 7th largest fiat currency in the crypto market.
Brazil’s tax authority plans to summon foreign crypto exchanges, including Binance, Coinbase, OKX, and KuCoin, to understand their operations and ensure compliance with local tax laws, per Reuters. This comes as the country is still trying to form its first crypto regulations.
Local companies in Brazil must report transactions and cooperate with tax authorities, but foreign companies might not have the same obligations. However, ignoring a summons from the Brazilian tax authority can lead to legal issues and operational restrictions.
Early this year, Brazil’s Brazilian Real (BRL) became the 7th largest fiat currency in the crypto market, reaching $6 billion in trading volume. Despite not being locally licensed, Binance remains the most popular exchange in the country.
With regards to Binance, it remains to be seen how they’ll respond to the summons especially after their Head of Finance Crime Compliance, Tigran Gambaryan, was wrongfully detained in Nigeria during a voluntary meeting with local regulators.
Brazil Plans to Create Crypto Regulation
The country’s central bank previously announced plans to propose new crypto regulations by the end of 2024. This initiative follows the completion of its second public consultation in May, indicating a proactive approach to establishing a regulatory framework for the growing cryptocurrency market.
The central bank also anticipated that parliament would regulate cryptocurrencies and service providers by June this year, as reported by Coinspeaker. However, these plans have been delayed and might be postponed until the end of the year.
Andrea Chaves, Deputy Secretary of Inspection at the Federal Revenue Service, stated that the government is summoning major foreign exchanges to understand their operations and ensure no illegal activities.
“It’s an area of concern for us to understand first how they operate here, whether there’s any illegality. We are also concerned about having information on Brazilian wealth subject to taxation here,” — Andrea Chaves
Although not based in Brazil, Binance, Coinbase, OKX, and KuCoin still operate in the country and even offer Portuguese-language websites.
Brazil Leads LATAM in Crypto Trading
In the first months of 2024, Brazil experienced a 30% increase in crypto trading, surpassing USD trading from mid-January to early May, according to Kaiko. During this period, BRL trading volume reached $6 billion, making Brazil the largest crypto marketplace in Latin America and the 7th largest global fiat currency in crypto.
This volume outpaced the Mexican Peso (MXN), which had $3.7 billion, and the Argentine Peso (ARS), which had $300 million in trading volume.
Interestingly, USDT’s share of BRL trading volume surged by around 20%, surpassing Bitcoin for the first time since the 2021 bull market. Binance remains the dominant exchange, holding a 79% market share, while MercadoBitcoin and Bitso, licensed in the country, account for the remaining 21%.
It remains to be seen how Binance will respond to the summons and if it will exercise caution. In February 2024, Binance executives Tigran Gambaryan and Nadeem Anjarwalla were wrongfully detained in Nigeria after traveling to meet with regulators, a claim Nigeria denies, according to Bloomberg.
Although Nadeem Anjarwalla has escaped and charges against Tigran Gambaryan have been dropped, Gambaryan remains in Nigeria. U.S. prosecutors and federal agents are urging the administration to intervene and facilitate Gambaryan’s return to the United States, according to Eleanor Terrett.
Unlike the case in Nigeria, Brazil has summoned Binance, along with Coinbase, OKX, and KuCoin, to explain their operations. Although not legally required to respond to the summons, failure to do so may result in legal issues, increasing the likelihood of companies complying.
