- Rio de Janeiro has become the first city in Brazil to accept cryptocurrency as payment for taxes.
- Companies providing cryptocurrency payment services must be registered with the city and comply with requirements set by the Brazilian Securities and Exchange Commission.
- The bill defines cryptocurrencies as legal payment methods and establishes a licensing regime for virtual asset service providers, while also setting penalties for fraud using digital assets.
As the world continues to embrace the rise of digital assets, the city of Rio de Janeiro is taking a bold step forward. The city recently announced its decision to accept cryptocurrency as a form of payment for taxes, making it the first Brazilian city to embrace digital assets in this way. This is a significant milestone for the country and could start the broader adoption of cryptocurrencies in Brazil.
The move was announced in an official decree recently published, which stated that taxpayers could use crypto alongside fiat currency to pay taxes. The city also said that taxpayers could pay with more than one crypto asset and that other types of taxes would be enabled in the future. To provide these services, companies must be registered with the city and comply with the requirements set out by the Brazilian Securities and Exchange Commission (SEC).
Global Trend of Accepting Crypto for Tax Payments
The selected companies will provide cryptocurrency payment services and convert crypto into fiat currency. Funds will be transferred to the city in local fiat currency without additional cost to taxpayers. This means taxpayers will not bear any extra costs for using digital assets to pay their taxes.
In a statement, Rio de Janeiro Mayor Eduardo Paes said: “Rio de Janeiro is a global city. Therefore, we are following technology and economic advances in digital financial assets. We look to the future and want to become the country’s capital of innovation and technology. Our city is the first in Brazil to offer the taxpayer this type of payment.”
This move by Rio de Janeiro is not an isolated one. Other countries have taken similar actions in recent times. For example, in September, the state of Colorado in the United States started accepting crypto as payment for taxes owed. Arizona, Wyoming, and Utah legislatures have all introduced bills to varying degrees to accept tax payments in digital currencies.
Record Highs in Brazil’s Crypto Adoption
Rio de Janeiro’s initiative is a clear example of the efforts being made in Brazil to broaden the adoption of digital assets. Recently, the number of companies holding cryptocurrency in Brazil has reached record highs, as the local taxation authority, Receita Federal do Brasil, recorded 12,053 unique organizations declaring crypto on their balance sheets, up 6.1% over the previous year.
The adoption of digital assets in Brazil has been further boosted by the recent signing of a bill to legalize crypto as a payment method within the country. Jair Bolsonaro, the former president of Brazil, signed the bill into law following approval from the country’s Chamber of Deputies. According to the bill’s text, residents will not be able to use cryptocurrencies as legal tender in the country, but they will be considered legal payment methods.
The new law also establishes a licensing regime for virtual asset service providers and sets penalties for fraud using digital assets. Like the United States, digital assets considered securities fall under the regulatory umbrella of Brazil’s Securities and Exchange Commission. The law also includes provisions likely made in response to the collapse of FTX, requiring exchanges to distinguish between user and company assets.