Brazil is undergoing a crypto-revolution. Like most countries, the government is trying to curb the growth of crypto-currencies through strict rules. However, unlike many countries with this problem, the Brazilian government has made some significant progress in regulating the crypto space. Last year, the government officially launched an investigation into some of the most widespread crypto-fraud in the country and immediately adopted guidelines for monitoring the crypto-currency industry and the companies that exist within it.
Tax obligations are too much to bear
Now, some of the stock exchanges based in Brazil are planning to close, as they are subject to substantial fines and taxes. According to a report from Bitcoin.com, two popular exchanges have announced plans to close their doors as the government’s progressive cryptographic rules have begun to affect them.
One of the exchanges was Acesso Bitcoin. In an interview with local news source Portal do Bitcoin, exchange boss and co-founder Pedro Nunes said: “After the Federal Revenue Service introduced these rules, we noticed a significant drop in trading volume. We also feel that the market for smaller exchanges has cooled off. “
The second stock exchange, known as Latoex, was recently ordered to suspend by the Brazilian Securities and Exchange Commission. If this suspension is not complied with, the company may be charged 100, 000 ) Brazilian Real (about $ 23, 1888). Instead of risking this, the exchange has decided to close as well.
The crypto room has growth pains
Currently, Brazil does not have comprehensive regulations for cryptocurrencies. However, all stock exchanges in the country fall under the jurisdiction of the Normative Instruction No. 1888 – a regulatory directive issued in May by the Brazilian Ministry of Finance 3, 2019. Under Brazilian law, persons who carry out cryptotransactions worth more than 30,000 Brazilians Reals in stock exchanges outside the country – or who carry out crypto-transfers over this value without passing through stock exchanges – must report their operations.
Customers of Brazilian exchanges are not required to report their operations, as the exchanges themselves are obliged to report all their operations. Any exchange that violates these laws may be subject to heavy fines.
Exchanges that are hard hit by reporting obligations quickly become the order of the day for the global crypto space. Several exchanges across the European Union have already been closed due to the requirements of the Fifth Money Laundering Directive (AMLD5 ) and the Financial Action Task Force (FATF) travel regime. Both require an exchange to provide information about their customers who make transactions above certain thresholds.
While it is understandable that governments want to curb the growth of crypto-capable criminal activity, there is also the fact that companies are being driven away by business and innovation at a crypto-speed is being stifled. Surely there could be a middle ground for everyone.