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The cryptocurrency landscape in Brazil has recently undergone a significant transformation, with Tether (USDT) emerging as the dominant player. According to recent figures released by Brazil's revenue service, USDT now fuels a substantial 80% of cryptocurrency transactions in Brazil.
In Brazil, Tether transactions have totaled approximately $55 billion up to mid-October, surpassing Bitcoin, which accounted for roughly $30 billion. What sets Tether apart from other cryptocurrencies is its status as a stablecoin. Its value is intentionally maintained at a fixed rate, often mirroring traditional fiat currencies like the U.S. dollar or the Brazilian real.
Historical data illustrates a consistent increase in the preference for USDT in Brazil, a trend that began in 2021. However, a pivotal moment occurred in July 2022 when Tether transaction volumes exceeded those of Bitcoin. This transition coincided with turbulent times in the cryptocurrency industry. Prominent crypto lenders such as Three Arrows Capital and Voyager Capital faced substantial challenges, leading to the closure of their operations. Consequently, the overall cryptocurrency transaction volume in Brazil declined by nearly a quarter, totaling approximately $31 billion for the year 2022.
In an effort to maintain regulatory oversight, the Brazilian government has deployed an advanced system that harnesses artificial intelligence and sophisticated network analytics to monitor its citizens' cryptocurrency transactions. This state-of-the-art mechanism can identify potential irregularities and even pinpoint the exact locations of individuals engaged in digital currency trading.
In addition to bolstering domestic surveillance, Brazil is extending its regulatory reach to offshore cryptocurrency assets owned by its citizens. A recent legislative move on October 25th classified cryptocurrencies as taxable "financial assets" concerning overseas holdings. Starting in January 2024, international earnings exceeding approximately $10,000 will incur a 15% tax, with amounts exceeding this threshold subject to a 22.5% tax.
It's important to note that since 2019, cryptocurrency trading platforms in Brazil, both domestic and international, have been required to report all user transactions to federal authorities. Furthermore, monthly capital gains from cryptocurrency sales exceeding approximately $7,000 are subject to progressive taxation, ranging from 15% to 23%. Notable international platforms like Coinbase, Binance, and Crypto.com coexist in Brazil's market alongside local entities such as Mercado Bitcoin and Foxbit.
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