The regulation of cryptocurrency in Brazil and the rise of traceability

Cryptocoins or virtual currencies differ from all that we are accustomed in the banking system, and can be defined as a form of money, but purely virtual and not issued by any government, whose value is determined by the open market and has become popular and valued over the traditional currencies.

It is undeniable that the Brazilian digital currency market is growing really fast. Nowadays, there are more investors in this market than the São Paulo Stock Exchange, B3, which has about 800,000 registered individuals. Still, according to the agency, last year, only negotiations with Bitcoins moved more than $8bn in the country.

Worried about that, at the end of 2018 the Brazilian Federal Revenue promoted a public consultation with the purpose of elaborating a regulation about the operations with cryptocurrency in Brazil. The fact is that without legislation, cryptocurrency can be used as an instrument of tax evasion and money laundering, for example.

The only orientation existing in Brazil is the one provided by the Federal Revenue website, which indicates that cryptocurrencies are assets and must be informed to the authorities by people who pursue it.

Insufficient

So, as the legislation is insufficient, it was prepared by the Federal Revenue (RFB), the public consultation RFB number 006/2018 sought to listen to the population about the changes they deem appropriate regarding the proposals of a new Normative Instruction to be issued by the RFB. It ensures that institutions operating with cryptocurrency in Brazil will have to inform, on a monthly basis, all operations carried out by its clients so that the Revenue can control the movements of these assets. The aim is to prevent the use of cryptocurrency as a way to evade taxes, hide assets and other crimes such as money laundering.

The goal of Federal Revenue is to implement a system similar to the one used in Japan, whereby brokerage firms control and pass on the information to the Treasury. Actually, it will be easier to control the operations, because today, the information is currently borne by the taxpayers in their income tax return.

The idea of ​​the Federal Revenue, in short, is to cross the information of the new statement with those contained in the Income Tax of individuals and companies, who are already obliged to declare to the Treasury the possession of virtual currencies annually, and thus to gauge with greater precision the capital gains obtained by the investors with purchase and sale operations.

Brazilian digital currency brokers will be obliged to send, monthly, a list of the customers who bought or sold these assets, as well as the updated position of their investments. Anyone who deals with cryptocurrencies through brokers established outside the country or transacts directly with other people, without going through brokerage firms, will also be required to report monthly to the authorities.

Protect

Despite this public consultation, there is a bill in Congress – number 2.303/15 – interpreting virtual currency as a payment arrangement. The purpose of the bill is to reduce the risks of virtual currencies against the financial stability of the economy, reduce their ability to finance illegal activities, and protect the consumer from possible abuse.

As we can see, these measures of the Federal Revenue and the bill in Congress seek to “trace” cryptocurrencies in Brazil. On the other hand, they can greatly harm the commerce and the companies that operate in national territory in view that this “oversight” can drive away new investors and migrate traders, thefts and users to overseas platforms, which are not required to provide clarification to RFB.

The post The regulation of cryptocurrency in Brazil and the rise of traceability appeared first on Coin Rivet.