Acesso and Latin America Token Exchange or Latoex, the two renowned cryptocurrency exchanges operating in Brazil, have decided to shut stop their services in the country blaming the enforcement of stringent tax regulations, hefty fines, and fluctuating trading volumes, as per the report published by Bitcoin.com. Last year, Brazil witnessed an array of illicit transactions and frauds which compelled the lawmakers to design and enforce a strict tax module for the cryptocurrency industry.
Cryptocurrency exchange, Acesso Bitcoin, has confirmed that the prime reason for its sudden closure of operations is the current unfavorable situation prevailing in the country concerning cryptocurrencies.
After the Federal Revenue Service introduced these rules, we noticed a significant decrease in the traded volume. We also feel that the market has cooled off for smaller exchanges,
stated Pedro Nunes, the co-founder of Acesso exchange.
The Brazilian regulatory watchdogs implemented new cryptocurrency regulations in the second half of 2019. The rules urged the crypto owners to report all the transactions related to virtual currencies as well as crypto-based donations, barters, deposits, withdrawals, and other activities. They were applicable to individuals, companies, brokerages, etc. The defaulters are penalized with fines ranging from 500 Brazil Reals (BRD) to 1500 BRD. The new regulations required investments into new resources and this condition has not been welcomed by the crypto exchanges.
Latoex has also blamed the new tax implications for the halt of its operations in the country. Deigo Velasques, the chief executive of Latoex’s investment wing, Latoex Capital, confirmed the shutdown news last week. After the shutdown, Latoex Capital, which got separated from the exchange in December, might still run its operations. Presently, Latoex is involved in raising funds to payback its clients and so is selling its assets to other firms. The trading platform is striving hard to reverse a suspension order given by Brazil’s Securities and Exchange Commission. In case of non-compliance, Latoex will have to face a $23,000 fine.
The Brazilian government is currently contemplating on various proposals for cryptocurrency regulations. The Senate is currently reviewing two other bills, PL 3825/2019 and PL 3949/2019.