Brazil’s leading cryptocurrency and fintech industry groups have warned that extending a financial transactions tax to stablecoin operations could harm innovation and violate existing law.
In a joint statement shared with CoinDesk, industry associations ABcripto, ABFintechs, Abracam, ABToken and Zetta said recent discussions on extending a financial operations tax (known locally as Imposto sobre Operações Financeiras, or IOF) to stablecoin transactions raise legal and economic concerns.
The organizations represent more than 850 companies in Brazil’s financial technology, virtual assets and market infrastructure sectors, the statement said.
The debate centers on a tax applied to certain financial transactions, including currency exchange operations. 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 that the IOF applies only to the settlement of foreign exchange transactions that involve the delivery of domestic or foreign fiat currency. Stablecoins, they said, do not meet that definition.
Brazil’s Virtual Assets Law, enacted as Law No. 14,478 in 2022, explicitly states that virtual assets are not considered national or foreign fiat currency, according to the statement. Industry groups say this distinction means stablecoins cannot be legally treated as instruments representing foreign currency under IOF rules.
Consequently, the organizations affirm that 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 extension of the tax incidence to operations with stable currencies through a decree or administrative rule is illegal, since acts of this nature cannot create or expand a tax triggering event,” the document reads.
The groups also warned against combining Brazil’s central bank monitoring rules with tax policy. They said oversight of digital asset transactions does not automatically justify applying the IOF tax to those activities.
Industry representatives argue that policy mistakes could harm a rapidly expanding sector. Brazil has become one of the largest crypto markets in the world, with approximately 25 million people participating in the ecosystem.
The adoption of the stablecoin in Brazil
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.
The use of stablecoins in Brazil has increased dramatically in recent years, making the country one of the largest markets for assets in Latin America and globally.
Dollar-pegged tokens, such as Tether’s USDT and Circle’s USDC, now dominate crypto activity, as Brazilians use them to hedge the volatility of their fiat currency, the real (BRL), move money across borders at lower costs, and provide liquidity for trade.
Brazil’s crypto market, according to an auditor from Brazil’s tax authority, Receita Federal, is moving between $6 and $8 billion per month, of which 90% are stablecoin flows.
Not all are US dollar stablecoins, as BRL-pegged stablecoins are gaining ground. Trading in tokens linked to the Brazilian real reached about $906 million in the first half of 2025, according to data from Dune.
