The Brazilian government, led by figures such as President Lula and Economy Minister Fernando Haddad, has adopted an aggressive stance regarding the control and taxation of cryptocurrencies. Given the incompetence of this communist-based government in generating revenue, the idea is to increase oversight, forcing exchanges to collect data from their users and requiring that transactions be linked to documents such as the CPF. Although this strategy is "justified" by increasing fiscal control and reducing tax evasion, it may end up generating a side effect contrary to that expected: the strengthening of the parallel and decentralized cryptocurrency market.
Historically, Brazil has experienced the creation of parallel markets, such as the famous parallel dollar, where citizens and companies sought ways to transact outside the official financial system to avoid inspection and high taxes. The same dynamic can be repeated with cryptocurrencies, but with a significant advantage: decentralization.
Experienced users and investors with large volumes of cryptocurrencies have a deep understanding of how to bypass control systems, whether by using execution lists in smart contracts or moving assets across multiple blockchains, making them difficult to track and monitor. These tools allow for automated and scheduled transactions that can occur without the need for any direct human intervention, making them virtually invisible to the IRS.
Furthermore, Brazil has a long tradition of creativity when it comes to finding ways to circumvent laws. If the government tries to impose strict regulations on cryptocurrencies, it is likely that new solutions and tools will emerge that will make tax evasion even easier, creating a network of transactions that escape traditional regulation. This will result in a growing parallel market based on decentralized cryptocurrencies that operate far from state oversight.
Instead of strengthening the formal market, the attempt at control could lead to an even greater migration of wealth out of Brazil, to international platforms and markets that are not subject to Brazilian laws. This movement not only weakens the national currency, the real, but also destabilizes the economy and generates greater distrust among the population, who see government control as a threat to their power of choice and financial freedom.
Therefore, instead of controlling cryptocurrencies, the government may inadvertently be creating the conditions for the black market to flourish, making it even harder to monitor transactions and collect taxes. The key to dealing with the cryptocurrency phenomenon is not overregulation, but adapting to and understanding decentralized dynamics and finding more effective control solutions that respect market freedom and innovation.
