Brazil’s new finance minister, Dario Durigan, is expected to delay a public consultation on applying a tax on financial operations, known locally 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 resigned to run for governor of São Paulo. Reuters said the new minister wants to focus on microeconomic measures and avoid proposals that could spark conflict with Congress during an election year.
The postponed hearing centered on a draft decree that could classify some crypto transactions as currency transactions.
This matters because currency deals in Brazil can face IOF rates ranging from 0.38% on some inbound flows to as much as 3.5% on overseas purchases, money transfers and card charges abroad. Transfers for overseas investments may face a rate of 1.1%.
The proposal has already drawn backlash from major industry groups. In a joint statement to ABcripto, ABFintechs, Abracam, ABToken and Zetta, which together represent more than 850 companies, said that 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 currency instruments by decree or administrative regulations.
The proposal attracted attention in February after the central bank classified part of the crypto market, particularly some stablecoin activities, within the framework of foreign exchange rules. It gave the Ministry of Finance and the tax authorities a basis for investigating whether these transactions should fall under the IOF.
The ministry may also shelve a separate proposal to abolish tax relief on some investment securities.
