Brazilië Forum

The environment today

When reading the news that a legislative commission will study and regulate cryptocurrencies, one might have the impression that local startups will now have limitless freedom to transact and form businesses.

Unfortunately, that's not even close to the reality of any business in Brazil.

As it happens with nations that have their legal system built under a civil law tradition, every innovation that emerges joins the current status quo to become legally equivalent of other similar technologies.

Back in 2009, if someone living under Brazilian law made his or her first transaction buying and selling bitcoin at a profit, they had to pay (or should have paid) income tax in order of 15% of its capital gains (unless the total amount involved was less than to R$35,000 ($10,600) in a month, when a tax exemption was applicable).

This means the current situation is the same for cryptocurrencies as it is for guitars, books or any other goods involved in transactions.

Bitcoin and other cryptocurrencies were never legal currencies under Brazilian law, though a federal law issued a definition of digital currency by declaring it as a resource stored in a device or electronic system.

As this definition didn't capture the nature of cryptocurrencies in general – covering private cryptographic keys instead of 'digital currency' itself – their legal status is given by Brazilian Civil Code, which defines them as regular assets. Being a movable asset means that transactions are possible without any kind of restriction – except for the duty of paying taxes and declaring its property to Brazilian IRS.