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Authority in Brazil Takes Bold Steps to Tax Crypto Assets Held in Self Custody

Brazilian authorities have announced significant changes to the taxation of cryptocurrencies, issuing a Provisional Measure that revokes previous exemptions.

This new tax regime mandates a flat 17.5% income tax on all profits from cryptocurrency transactions, affecting both domestic and international holdings.

Previously, gains on crypto investments were taxed only if they exceeded specific thresholds, creating a more nuanced framework that has now been simplified.

Under the updated rules, all income from virtual asset transactions, including those involving self-custody wallets, will be subject to taxation.

This marks a notable shift, hinting at potential taxation of activities within decentralized finance (DeFi), though specific enforcement methods remain unclear.

Traders will calculate their taxes quarterly and can offset current gains with prior losses under this new system.

The announcement coincides with broader discussions about increasing the financial transaction tax in Brazil.

Legislators are exploring measures to integrate cryptocurrency assets into these tax considerations as a means to stabilize the industry.

With this comprehensive approach, Brazilian authorities aim to enhance revenue collection from the rapidly growing crypto sector.

The initiative emphasizes the need for clear regulatory frameworks as the world of cryptocurrencies evolves and matures.