Regulatory Clarity Wins: How Brazil Just Protected Its Crypto Ecosystem From a Crippling Tax

• Brazil’s Congress rejected a provisional measure to tax cryptocurrency transactions, preventing a 17.5% levy on small holders.
• Brazilian crypto investors hold over triple the average wealth of traditional investors, with 25% being millionaires.

The Chamber of Deputies of Brazil reached a decision on Wednesday, October 8, that prompted immediate reactions across the digital finance sector. Deputies rejected Provisional Measure 1,303, a proposal that would have established taxes on cryptocurrency operations and increased the income tax rate for exclusive funds. That rate had been set at 18%. This parliamentary decision ended one of the most contentious legislative agendas in the Brazilian Congress in recent weeks.

A Legislative Process with a Favorable Outcome for Cryptocurrencies

The provisional measure proposal had received prior approval in a joint congressional committee. This initial approval generated a strong reaction among companies and individuals investing in cryptocurrencies. Critics argued that the measure would create regulatory uncertainty and discourage the development of innovation projects in the country. The rejection in the plenary session of the Chamber of Deputies caused the text to lose its validity immediately. Therefore, the measure did not proceed to the stage of presidential sanction.

The case had attracted attention since its vote in the joint committee. The topic caused considerable commotion in the crypto asset market and managed to mobilize parliamentarians who were firmly opposed to the proposal. The final result is interpreted as a victory for companies in the sector, which had warned about the negative impact of the proposed taxation. Those companies argued that the growth of blockchain companies and fintechs in Brazil would be affected.

The Brazilian Congress specifically rejected the elimination of tax exemptions for small cryptocurrency holders. The measure was withdrawn from the discussion agenda with 251 votes in favor of its elimination.

President Luiz Inácio Lula da Silva described the result as a defeat imposed on the Brazilian people. On the other hand, groups representing the cryptocurrency sector openly celebrated the decision. The measure would have imposed a fixed tax of 17.5% on traders moving less than 35,000 reals, equivalent to approximately 6,500 US dollars.

The Brazilian Association of Tokenization and Blockchain Companies, known as ABToken, praised the legislative decision. The association described the outcome as a victory for the cryptocurrency ecosystem in the country. The federal government had previously made estimates about the revenue the tax would generate. Those projections calculated more than 17 billion reals, around 3 billion US dollars, in revenue for the year 2026.

The Profile of the Brazilian Crypto Investor

A survey conducted by the consultancy Altside reveals concrete data about Brazilian crypto investors. More than 25% of investors in crypto assets already hold total assets exceeding R$ 1 millón. These investors approach the sector with a focus on wealth protection and diversification of their portfolios.

The Altside survey shows an increasingly mature profile with consolidated positions. The average assets of these investors reach R$ 521,900. This figure represents more than three times the average of traditional investors in the country.

Felipe Mendes, chief executive officer of Altside, stated that the myth of cryptocurrencies as a game for amateurs belongs to the past. Mendes explained that digital assets have become components of long-term investment strategies. Those strategies are oriented toward wealth protection and asset diversification. Almost half of the investors consulted declare having a moderate risk profile.

This concern for security and control also appears in the preference for self-custody of assets. In practice, 54.2% of investors prefer to manage their digital wallets directly. This option contrasts with the alternative of trusting centralized custody platforms. Another 19% use staking systems to generate passive income. A further 17.5% maintain investments in stablecoins that generate some form of yield.

The average Brazilian investor holds six different crypto assets in their investment portfolio

Bitcoin leads preferences with a presence of 84.9%. Ethereum occupies second position with 65.6%, followed by Solana with 50.8%. The stablecoin USDT appears in fourth place with 26.4%, while XRP completes the top five positions with 24.8%.

The geographic distribution of investors shows concentration in the Southeast region of Brazil. That region accounts for 57.6% of the total investors, with the state of São Paulo representing 31.3%. The South region accounts for 18.1% of investors, while the Northeast has 12%. The Center-West and North regions present lower percentages, with 7.9% and 4.4% respectively.

The Altside study also shows that many investors between 40 and 70 years old see cryptocurrencies as a viable alternative. These investors seek to strengthen their asset reserves and ensure stability during their retirement. Factors such as high Selic interest rates, global instability, and the arrival of Bitcoin exchange-traded funds have influenced this behavior. Interest in assets not correlated with traditional markets shows a growing trend.

Felipe Mendes concluded that the Brazilian investor follows the global trend of institutionalization in the crypto asset sector. Cryptocurrencies are becoming a strategic pillar within wealth management for a growing segment of the population. The research was conducted during the year 2025 with a sample of 2,440 Brazilian investors.