Brazil's Crypto Constituency Seeks Regulatory Framework

Brazil is at a crossroads when it comes to cryptocurrency and digital assets. With tens of millions of Brazilians participating in the crypto economy, the country has an opportunity to shape its future in finance.

A recent survey by Datafolha and Paradigma Education, sponsored by Coinbase and Hashdex, found that nearly 29 million people in Brazil own or have owned digital assets, which is roughly one-sixth of the adult population. This demographic skews young, tends towards the political center, and is more politically engaged than average.

The Brazilian government is currently weighing whether to reclassify stablecoins as electronic money or foreign currency, which could lead to IOF taxation on crypto transactions and create an unstable environment for the sector's development. The next government will have a unique opportunity to shape this trajectory and seize momentum to internationalize the Real.

Coinbase is proposing that the next government develop a robust framework for stablecoins, maintain them as virtual assets under the existing crypto legal framework, and oppose IOF taxation. They also recommend funding regulators to match their mission, investing in financial education, and building a regulatory framework that enables the stablecoin market to develop safely and sustainably.