Brazil has reportedly put its proposed stablecoin tax on hold as President Luiz Inácio Lula da Silva shifts attention toward the coming elections. Reuters, citing sources, said the government is moving other issues to the front and steering away from controversial legislation for now.
The change marks a pause for a measure that local media had described as only weeks away. One source said the idea remains under consideration, but the political climate in Brasilia is tense and requires caution.
Proposed 3.5% levy drew backlash from crypto groups and lawmakers
The plan circulating in Brazil would treat stablecoin transactions as foreign exchange operations and apply a 3.5% levy to all movements. Users moving less than 10,000 Brazilian reais per month would be exempt, an amount the report put at roughly $1,910.
The proposal triggered a strong response from crypto organizations and members of Congress. Critics argued the measure would be unconstitutional and would conflict with the country’s current cryptocurrency rules. Some lawmakers and industry participants said they were prepared to challenge it in court.
Revenue expectations clash with political timing
Analysts said the proposal could hurt Brazil’s crypto sector, but it could also generate more than $8 billion from crypto-related flows and move stablecoin remittances out of a regulatory gray zone. According to the report, Brazilians have been using that gap to avoid taxation.
For now, the government appears unwilling to spend political capital on the issue. The report said the measures may be pushed into a hypothetical future Lula term instead of being advanced in the current pre-election period.
Durigan takes over after Haddad resignation
Newly confirmed Economy Minister Dario Durigan is now the main face of Brazil’s economic policy. The article noted that in November he had reinforced that stablecoin taxation rules were being prepared. He now also has to deal with the financial effects on Brazil stemming from the U.S.-Israel-Iran conflict.
Durigan steps in after Fernando Haddad, a longtime Lula ally, resigned in order to run for Governor of São Paulo in the upcoming elections. That leadership transition, combined with mounting election pressure, has left the stablecoin tax proposal without immediate momentum.