Brazil’s Federal Revenue Office announced on Wednesday October 31 that it has opened a public consultation to gather suggestions for processes to implement a monitoring system of companies that buy and sell cryptocurrencies. The consultation will be ongoing until November 19.
The aim of the processes is to put an end to money laundering and allow for crypto companies to be properly taxed. Last year Ilan Goldfajn estimated the risk of cryptocurrencies to be high. They also state that the Treasury has seen evidence of fraud, corruption and money laundering due to cryptocurrency trading in Brazil.
Although this is a new move for Brazil, it is a trend we are seeing all over the world, more and more countries are looking at the cryptocurrency operations within their land and realizing its time to implement some control. Internationally there is no unified approach to cryptocurrency regulation, and most countries are finding their own ways to regulate the industry. This can be a careful balance of ensuring the safety of individuals and also not over-regulating to the point of putting off FinTech innovators.
Criminal Activity and Money Laundering
Authorities around the world are concerned that the decentralized nature of cryptocurrencies could be used for online criminal activity. Many dark web marketplaces only accept cryptocurrency transactions; in the past, this was limited to just Bitcoin because it provides anonymity for customers. The anonymous nature of cryptocurrencies means people can use them for nefarious transactions such as illegal drugs or weapons.
Governments around the world are trying to implement ways to identify individuals using cryptocurrencies and be able to track transactions in a move to reduce the chance of criminal activity in this emerging market. The US and the EU have already taken steps towards this, and South Korea earlier this year announced a system intended to ban the use of anonymous cryptocurrency accounts.
It will be interesting to see what the consultation in Brazil results in and what direction they intend to go to regulate crypto markets in Brazil. Blockchain technologies are becoming more popular in Brazil, especially when you consider that a presidential candidate uploaded his manifesto to a blockchain platform. Hopefully, this support of the technology on a government level will mean they can successfully strike the balance between meaningful regulation and continued innovation in the industry. We are expecting Brazil will release the findings of the consultation after November 19.