The Department of Federal Revenue (RFB) of Brazil has just published a new tax code that indicates a fine for any taxpayer who does not declare their Bitcoin or other cryptocurrency transactions. The new cryptocurrency tax code is a follow-up to provisions made by the RFB in August. Those rules require that any Brazilian citizen report their transactions involving cryptocurrencies. Those rules were introduced in May 2019, and they were established under Normative Instruction number 1,888.

The tax code applies to an individual, company and brokerage. It includes all cryptocurrency activities, such as buying, selling, donating, bartering, depositing, withdrawing and other types of transactions. Anybody who fails to file a statement about their cryptocurrency transactions could face penalties. Those penalties range from a fine of 500 Brazilian reals to 1,500 Brazilian reals. In United States dollars, this ranges from $120 to $360 as of the trade value of currencies on December 6, 2019.

In August 2019, there was a report that the RFB believes that the digital coin market in Brazil has more investors than the nation's second-oldest stock exchange, which is the B3. The B3 reportedly has about 800,000 investors as of December 2019.

In early September, there was a report that the RFB would run out of funds by the end of that month. The Brazilian authorities said at that time that if the government would not unlock certain financial resources, the tax agency would have to get out of contracts with partners, stop issuing individual registries and identification numbers and quit paying out income tax refunds to those who overpaid.

The Brazilian cryptocurrency exchanges could also be affected if the RFB runs out of money. All of the exchanges have a requirement for reporting user data and any transaction that requires the use of an RFB system. If the RFB has to shut its system down, the digital coin exchanges would be compelled by law but not physically able to comply with the reporting requirements for those digital transactions. Investors and Brazilian citizens will have to keep a close eye on developments related to the RFB's status.