Brazil’s new finance minister, Dario Durigan, is expected to delay a public consultation on applying a tax on financial operations, locally known as Imposto sobre Operações Financeiras (IOF) to some cryptocurrency transactions, Reuters reported, citing sources familiar with the matter.
Durigan took office on March 20 after Fernando Haddad stepped down to run for governor of São Paulo. Reuters said the new minister wants to focus on microeconomic measures and avoid proposals that could trigger conflict with Congress during an election year.
The postponed consultation centered on a draft decree that could classify some crypto transactions as foreign exchange operations.
That matters because foreign exchange deals in Brazil can face IOF rates ranging from 0.38% on some inbound flows to as much as 3.5% on overseas purchases, remittances and card spending abroad. Transfers for overseas investment can face a 1.1% rate.
The proposal has already drawn pushback from major industry groups. In a joint statement ABcripto, ABFintechs, Abracam, ABToken and Zetta, which together represent more than 850 companies, said applying IOF to stablecoin transactions would be illegal under Brazil’s constitution and the country’s 2022 Virtual Assets Law.
They argued that stablecoins are not fiat currency and cannot be treated as foreign exchange instruments by decree or administrative rule.
The proposal drew attention in February after the central bank classified part of the crypto market, especially some stablecoin activity, within the scope of foreign exchange rules. That gave the Finance Ministry and tax authorities a base to study whether those transactions should fall under IOF.
The ministry may also shelve a separate proposal to end tax breaks on some investment securities.