The crypto faction in the Brazilian Congress is expecting the issuance of a decree to establish a 3.5% tax on stablecoin transactions to file a draft bill and block this initiative. The Parliamentary Front for the Free Market argues that the measure would constitute an overreach of the Executive branch.
Brazil’s Crypto Faction Vows To Block Stablecoin Taxation Decree
A battle is brewing between the Brazilian government and Congress on stablecoin taxation.
The so-called crypto faction in the Brazilian Congress is preparing several actions to confront the issuance of a decree establishing a 3.5% tax on stablecoin transactions, directed to foreign currency movements, known as the Tax on Foreign Transactions (IOF).
While the decree has not been issued, members of the Parliamentary Front for the Free Market have already established a course of action directed to block the measure and bring the discussion to Congress. While the first move is to show strong opposition to the measure before being issued, the front would introduce a proposed legislative decree, a legislative draft that seeks to suspend executive orders that lawmakers believe exceed the executive’s authority.
If the proposed legislative decree were to be passed, the issue would have to be re-discussed in Congress, and it could even be repealed.
Antonio Vale, coordinator of the Free Market Institute, told Portal do Bitcoin that there are regulatory contradictions to implement this stablecoins transaction tax.
He assessed:
“The decree that defines the IOF tax on foreign exchange states that the taxable event is the exchange of national or foreign currency. However, Law 14,478/2022, which regulates the crypto sector in Brazil, explicitly states that virtual assets are not national or foreign currencies.”
Vale also stated that this measure would create instability for the local crypto industry, as it could affect the economic feasibility of already existing businesses in Brazil.
Julia Rosin, President of Abcripto, the Brazilian Association of Cryptoeconomics, has also declared against this expected decree, claiming it will take legal action against the government. Rosin alleges that the measure is unconstitutional, equating stablecoins with foreign currency and contradicting current regulations.
