Brazil Moves to Tax Crypto-Based International Payments as Stablecoin Use Surges

• Brazil moves to target crypto-based cross-border payments, especially on stablecoins.

• Crypto usage in Brazil has skyrocketed to $42.8 billion, with investors using stablecoins as a hedge against local inflation.

Brazil Targets Stablecoin Payments to Close Regulatory Gaps

Brazil is preparing to impose taxes on the use of cryptocurrencies, especially stablecoins for international payments, according to officials familiar with the ongoing discussions. The proposal would expand the country’s IOF financial transaction tax to cover certain cross-border transfers.

These transfers will involve virtual assets, following the central bank’s decision in February to classify stablecoin activity as foreign-exchange operations. Although the Finance Ministry has not publicly commented, internal sources say the government wants to close a regulatory loophole that has allowed billions of reais to move abroad without being subject to standard FX taxation.

Stablecoin Boom Creates Revenue Pressure and Regulatory Concerns

The push for taxation comes amid rapid growth in Brazil’s crypto market. Federal tax authority data shows that the country processed 227 billion reais ($42.8 billion) in crypto transactions in the first half of 2025, representing a 20% increase from the previous year.

Stablecoins have dominated this expansion, particularly USDT, which accounted for nearly two-thirds of all activity. By contrast, bitcoin accounted for just 11% of transaction volume, underscoring a shift in user behavior from speculative trading to practical payment and remittance functions.

Officials have warned that stablecoins are frequently used as a low-cost way to hold dollar balances or send funds abroad, effectively bypassing Brazil’s traditional FX market.

This has raised concerns around both tax avoidance and money laundering. Thus, regulators are arguing that the absence of rules created a channel for unmonitored financial flows at a time when public revenue remains under pressure.

As Brazil works to meet its fiscal targets, taxing crypto-based foreign transfers could become a meaningful source of additional government income.

New Framework Treats Stablecoins as FX Transactions

Under the central bank’s new regulatory framework, taking effect in February, any purchase, sale, or exchange of stablecoins will be treated as a foreign-exchange transaction. This classification extends to international payments conducted through virtual assets, card-based settlements, electronic transfers, and self-custody transfers.

One government source emphasized that while the new definitions do not automatically create tax obligations, they lay the groundwork for the federal tax authority to impose IOF requirements on these operations.

Authorities also expanded reporting requirements on Monday, mandating that foreign crypto service providers operating in Brazil now report relevant activity to the tax service. Enforcement agencies believe that greater visibility into crypto transfers will not only support IOF collection but also help identify cases of import tax evasion.

A Federal Police official noted that many companies underreport formal imports while settling the majority of payments through stablecoins, estimating that more than $30 billion in annual tax revenue is lost through such schemes.

What Comes Next for Crypto Regulation in Brazil

As policymakers weigh implementing IOF taxes on stablecoin-based international payments, the move signals a new phase in Brazil’s approach to digital assets. Rather than targeting investors, the government is focusing on transactional use cases that resemble traditional foreign-exchange flows.

With February’s classification deadline approaching, the upcoming guidance from Brazil’s tax authority will determine how deeply the new rules will affect businesses and individuals who rely on stablecoins for everyday cross-border activity.

Whether the change becomes a significant revenue generator or simply closes long-standing loopholes, Brazil’s stance highlights a broader global trend: stablecoins are no longer viewed as niche financial tools but as central components in modern international payments—and regulators want a firmer grip on them.