Lula government wants to treat Bitcoin purchases as foreign exchange in order to charge IOF of 3.5%

The federal government study yet another Bitcoin tax for Brazilians. Under discussion at the Ministry of Finance and the Internal Revenue Service, a new proposal envisages equate the purchase of cryptocurrencies with exchange transactions, paving the way for the collection of IOF of up to 3.5% on purchases of Bitcoin and other cryptoassets.

In practice, this means making it more expensive to access digital assets that many Brazilians use as protection against inflation, devaluation of the real and economic instability.

Cryptocurrency purchases to be treated as sending money abroad

For the government, by buying cryptocurrencies, citizens would be doing something equivalent to a foreign currency conversion, as if they were buying dollars or sending funds out of the country.

This interpretation would allow the same IOF rate to be applied to certain foreign exchange transactions. But unlike the dollar, the Bitcoin is not a state currency, does not depend on central banks and does not circulate within the traditional financial system.

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Technically, cryptocurrencies are closer to digital archives than anything else. Cryptoasset transactions are like text messages on a computer. distributed network. And the servers are spread all over the world, with no official headquarters in any country.

Even so, the IRS sees the growth of the crypto market as a “loophole” that needs to be closed.

More tax to “correct distortions”

Internally, the talk is of tax equality. For the government, it wouldn't make sense to heavily tax traditional financial operations while crypto-asset transactions remain outside the immediate reach of the Financial Operations Tax.

In practice, however, the measure works like an entry tax on Bitcoin, This penalizes those who try to preserve value outside the real and the banking system.

Currently, cryptocurrencies such as Bitcoin are already taxed when there are sales above R$ 35 thousand in the month, as long as there is capital gain.

A possible IOF charge would completely change this logic: each purchase would be automatically charged 3.5%, regardless of whether the investor makes a profit or even a loss in the future.

Small investors most affected

If the proposal goes ahead, the impact will be greatest precisely on those who buy small amounts frequently - ordinary Brazilians who make monthly contributions, fractional purchases or use crypto as a store of value.

Among the most affected are:

• Individual investors
• National exchange users
• Who uses Bitcoin as asset protection
• Who makes international remittances via crypto

The incentive, of course, is to seek off-the-radar alternatives, Such as negotiations without intermediaries and decentralized solutions.

The measure is not yet in force

So far, there is no effective IOF charge on cryptocurrencies. The proposal still depends on formalization, as well as regulatory and operational adjustments to the platforms operating in Brazil.

The most worrying thing is that, as the IOF is a regulatory tax, the Lula government has the prerogative to change its incidence and rates by decree, without going through Congress. 

Finally, the mere fact that the idea is under discussion is a wake-up call for the sector: the state is making it clear that does not intend to give up taxing any form of individual financial sovereignty. For those who see Bitcoin as a tool for individual sovereignty, there is an increasing need to understand which are the best sovereign tools and how to use them to achieve financial freedom.