Brazil's cryptocurrency rules drive capital inflows as other markets see outflows

Brazil is experiencing an increase in cryptocurrency inflows, even as global investors are pulling out of crypto products due to shifting regulations and unstable markets. The nation is weighing the introduction of a tax on overseas crypto transactions,

, as part of efforts to address regulatory gaps and enhance government revenue. This initiative comes after , enabling tax officials to access information on offshore crypto holdings. The Ministry of Finance is looking to broaden the Imposto sobre Operações Financeiras (IOF) tax to cover international crypto dealings—a tax that is usually levied on foreign exchange, credit, and insurance transactions .

This tax proposal comes at a time when

, with stablecoins making up nearly two-thirds of the $42.8 billion in crypto trades during the first half of 2025. Globally, however, the crypto sector is seeing notable withdrawals: last week, crypto investment products saw $2 billion in outflows—the highest since February 2025, according to CoinShares. on November 14. This represents the , with worldwide withdrawals totaling $3.2 billion. Experts link this trend to global economic uncertainty, large-scale selling by major crypto holders, and a general move away from risk .

, setting a new standard for crypto regulation in the region. The Central Bank of Brazil has starting in February 2026, and now requires crypto businesses to maintain capital reserves between $2 million and $7 million, depending on their operations. Together with CARF adoption, these policies are designed to bring crypto activity into the mainstream financial sector and improve oversight of international transfers .

This regulatory initiative signals

toward greater oversight of its crypto industry, which handled more than $1.7 trillion in on-chain transactions from mid-2024 to mid-2025. Although the 17.5% tax on crypto capital gains remains unchanged, the new measures both domestic and cross-border crypto movements. At the same time, international investors are favoring multi-asset and short-Bitcoin approaches, with Germany seeing $13.2 million in inflows compared to the U.S.’s $1.97 billion in outflows .