In Brief Two Brazilian crypto exchanges have shut down. One, Acesso Bitcoin, said it shut down due to new legislation.

One piece of legislation, Normative Instruction 1888, makes crypto companies pay up to $360 for each transaction they don't report to authorities.

Upcoming legislation could make things harder for crypto exchanges operating in Brazil.

Two Brazilian crypto exchanges have shut down amid pressure from the country’s tax authorities, reported Portal do Bitcoin last week.

The two crypto exchanges, Acesso Bitcoin and Latoex (formerly E-juno), shuttered following threats of severe fines from the Department of Federal Revenue under a recent piece of legislation, Normative Instruction 1888.

What is Normative Instruction 1888?

Normative Instruction 1888, implemented in August 2019, obliges companies that process crypto transactions in Brazil to report each and every transaction. If they don’t, they face hefty fines of up to $360 per transaction.

“After the Federal Revenue Service introduced these rules we noticed a significant decrease in the traded volume. We also feel that the market has cooled for smaller exchanges,” Pedro Nunes, co-founder of Porto Alegre-based Acesso Bitcoin, told Portal do Bitcoin. Customers can withdraw funds in Brazilian Real, and Nunes recommends that customers transfer Bitcoin funds to other exchanges.

The market has cooled for smaller exchanges. Pedro Nunes

Latoex, based in Sao Paulo, shut its doors earlier this week. It’s unclear why, but it could be due to the new regulation. Customers can still withdraw their funds.

Further pressure is mounting. Though the country’s hasn’t implemented any specific legislation for the cryptocurrency industry, the National Congress of Brazil is considering several proposals that would regulate cryptocurrency exchanges that operate in the country. Three bills—Bill 2303/2015, PL 3825/2019, and PL 3949/2019—could make things difficult for crypto exchanges operating in the country.

PL 3825/2019 would introduce penalties for the “fraudulent and reckless management of Crypto Exchanges”, and PL 3949/2019 “establishes conditions for the operation of crypto exchanges”, and “define crimes against the national financial system.”