Brazil’s leading cryptocurrency and fintech industry groups have warned that extending a financial transaction tax to stablecoin operations could harm innovation and violate existing legislation.
In a joint statement shared with CoinDesk, industry associations ABcripto, ABFintechs, Abracam, ABToken and Zetta said recent discussions to extend a tax on financial operations (known locally as Imposto sobre Operações Financeiras or IOF) to stablecoin transactions raise legal and economic concerns.
The organizations represent more than 850 companies across Brazil’s financial technology, virtual assets and market infrastructure sectors, the statement said.
The debate concerns a tax imposed on certain financial transactions, including currency transactions. According to the associations, applying the tax to stablecoin transactions would conflict with Brazil’s current legal framework and harm the country’s crypto industry.
They argue that the Constitution defines the IOF as applicable only to the settlement of foreign exchange transactions involving the delivery of domestic or foreign fiat currency. Stablecoins, they said, do not meet this definition.
Brazil’s Virtual Assets Law, passed as Law No. 14,478 in 2022, explicitly states that virtual assets are not considered national or foreign fiat currency, the statement said. The industry groups say this distinction means stablecoins cannot legally be treated as instruments representing foreign currency under IOF rules.
As a result, the organizations say any attempt to expand the tax through a decree or administrative rule would be illegal. Under Brazil’s constitutional framework, new taxes or expanded tax triggers must be approved through the legislative process.
“In this context, any expansion of the tax incidence on operations with stablecoins through a decree or administrative rule is illegal, as actions of this nature cannot create or expand a tax-triggering event,” the document reads.
The groups also warned against mixing surveillance rules from Brazil’s central bank with tax policy. They said that oversight of digital asset transactions does not automatically justify applying the IOF tax to these activities.
Industry representatives argue that policy missteps could hurt a fast-growing sector. Brazil has emerged as one of the world’s largest crypto markets, with an estimated 25 million people participating in the ecosystem.
Brazil’s stablecoin adoption
The associations said the country’s crypto sector has grown alongside a broader wave of financial innovation, including fintech platforms, digital payments and blockchain infrastructure. They also noted that similar taxes on stablecoin transactions are not widely used in other major economies.
Stablecoin usage in Brazil has increased dramatically in recent years, making the country one of the largest markets for the asset in Latin America and globally.
Dollar-pegged tokens like Tether’s USDT and Circle’s USDC now dominate crypto activity as Brazilians use them to hedge volatility in their fiat currency, the real (BRL), move money across borders at lower costs and provide liquidity for trade.
Brazil’s crypto market moves between $6 and $8 billion a month, with 90% of that being stablecoin flows, according to an accountant at Brazil’s tax authority, the Receita Federal.
Not all of them are US dollar stablecoins, as BRL-denominated stablecoins are gaining ground. Trade in tokens pegged to the Brazilian real reached about $906 million in the first half of 2025, according to Dune data.
