Can you imagine paying your taxes in crypto? If you wonder what that might entail, the crypto-traders of Rio de Janeiro might be able to give you some answers in 2023.
The former Brazilian capital with a population of 6.45 million is reportedly working towards making this a reality. Needless to say, there are larger forces at play as well.
E aí, tax collector?
News companies world over quickly reported that Rio de Janeiro would accept crypto-taxes starting next year. However, some caveats do apply. A news report by Brazil’s Portal do Crypto has warned that there isn’t yet any official information about which crypto would be accepted for tax purposes. Furthermore, the collected crypto-tax is to be converted into Brazilian reais so as to avoid price volatility issues.
That being said, there are tentative plans to see whether a percentage of the city’s treasury can be turned into crypto for future use.
Adopt, don’t shop
How likely is it that Rio residents will embrace the new tax scheme and give their crypto to the government? It’s hard to provide an exact figure, but crypto-adoption is surging in the South American country. The Blockchain LatAm Report 2022 by Sherlock Communications found that almost 5% of Brazil’s population owns crypto and crypto ETFs are in demand. It added,
“The first Crypto ETF, HASH 11, launched by Hashdex, ranks as the second-most purchased futures on the Brazilian stock exchange with more than 130.000 investors. In total, Brazilians invested BRL 5.629 billions in crypto related investment products approved by CVM.”
Unleash the big names
Rio de Janeiro is reportedly bringing some crypto-companies on-board to help deploy its ambitious tax plan. While the names haven’t been announced yet, there are guesses that one might be a familiar exchange giant.
Binance CEO Changpeng Zhao tweeted a photo of his meeting with the mayor of Rio de Janeiro. He further added that Binance has plans to open an office in the city. These are extremely bullish signs for crypto-adoption indeed.
9 days ago, I made a handshake deal with mayor @eduardopaes. Rio De Janeiro will accept crypto for tax payments, and @Binance will open an office in Rio. He's done his part. We are working on ours. https://t.co/HPJONtBfQ8
— CZ 🔶 Binance (@cz_binance) March 26, 2022
And yet, half a year ago, many crypto-investors theorized that El Salvador would be the nation leading Latin America in the adoption of Bitcoin. However, six months after the Bitcoin Law came into force, the El Salvador administration has decided to postpone the launch of its ambitious Volcano Bonds, citing “market conditions.”
In fact, Reuters reported that the country is “seeking support” from Binance in order to boost Bitcoin uptake in its country. Zhao visited El Salvador in late March and also met with President Nayib Bukele.
— Nayib Bukele (@nayibbukele) March 25, 2022
Needless to say, the crypto-world is waiting to see what comes of their interaction.