Brazil’s leading cryptocurrency and fintech industry group has warned that extending a financial transaction tax to stablecoin businesses could harm innovation and violate existing laws.
In a joint statement shared with CoinDesk, industry associations ABcripto, ABFintechs, Abracam, ABToken and Zetta said recent discussions about extending the Financial Operations Tax, known locally as the Imposto sobre Operações Financeiras, or IOF, to stablecoin trading have raised legal and economic concerns.
The statement stated that these organizations represent more than 850 companies in Brazil’s financial technology, virtual assets and market infrastructure fields.
At issue is the taxation of certain financial transactions, including foreign exchange operations. The association said that taxing stablecoin transactions would conflict with Brazil’s current legal framework and harm the country’s cryptocurrency industry.
They argue that the Constitution defines IOF as applicable only to the settlement of currency exchange transactions involving the delivery of domestic or foreign legal tender. Stablecoins, they say, don’t fit that definition.
The statement said that Brazil’s Law No. 14,478, the Virtual Assets Law, promulgated in 2022, clearly stipulates that virtual assets are not considered domestic or foreign legal tender. Industry groups say the distinction means stablecoins cannot legally be considered instruments representing foreign currencies under IOF rules.
As a result, the groups said any attempt to expand the scope of the tax through statute 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 action to expand the scope of taxation of stablecoin businesses through statute or administrative rule would be unlawful, as actions of this nature cannot create or expand tax triggering events,” the filing reads.
The groups also warned against confusing the central bank’s surveillance rules with tax policy. They stated that regulation of digital asset transactions does not automatically justify the imposition of an IOF tax on these activities.
Industry representatives believe policy missteps could harm the rapidly expanding industry. Brazil has become one of the largest cryptocurrency markets in the world, with an estimated 25 million people participating in the ecosystem.
Brazilian Stablecoin Adoption
The associations said the country’s cryptocurrency industry is evolving 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.
Stablecoin usage has increased dramatically in Brazil in recent years, making the country one of the largest asset markets in Latin America and globally.
U.S. dollar-pegged tokens like Tether’s USDT and Circle’s USDC now dominate cryptocurrency activity as Brazilians use them to hedge against the volatility of fiat currency the real (BRL), move funds across borders at lower costs, and provide liquidity for trading.
According to auditors from Brazil’s tax agency Receita Federal, Brazil’s cryptocurrency market has a monthly trading volume of between $6 and $8 billion, 90% of which is stablecoin traffic.
Not all stablecoins are USD stablecoins, as stablecoins pegged to the Brazilian real are becoming increasingly popular. According to Dune data, the trading volume of tokens pegged to the Brazilian real reached approximately $906 million in the first half of 2025.
