Privacy at risk? Pump in Bitcoin tracking in Brazil puts users at a crossroads.

Source: PortaldoBitcoin Original Title: Privacy at risk? Increased tracking of Bitcoin in Brazil puts users at a crossroads Original Link: Experts stated openly at the Brazil Blockchain Conference held last Saturday, (, that the Brazilian government has been able to relatively easily track Bitcoin and is working to further expand its regulatory power.

The Republic Prosecutor Alexandre Senra opened the discussion on stage, showcasing public cases, such as the GAS consulting fraud case led by the “Bitcoin Pharaoh”, and how it can be easily tracked on the blockchain. He demonstrated that this pyramid scammer still controls a wallet containing 1,300 bitcoins (equivalent to 630 million reais), and in January of this year, he sent 24 bitcoins to a custody wallet of a certain exchange.

According to him, although the state cannot seize Bitcoin without access to private keys, it can monitor addresses and receive alerts when relevant transfers occur, such as transfers to centralized entities (like exchanges), after which it can request the seizure of those funds.

The government's ability to track cryptocurrency transactions is expected to increase significantly next year, as central banks impose new regulatory requirements on the crypto sector, such as exchanges being required to report users' self-custody wallets.

Negative Impact of Crypto Tracking

According to Marcelo Paz from PRO Hash, the increasing control of the state over the cryptocurrency market requires users to make a choice: submit information requested by the government, taking the risk that their data may be exposed in a potential leak, or stay off the radar, avoiding interaction or reporting transactions with centralized entities, risking being caught and fined.

“Although it seems contradictory, he supports the second option. 'If the state knows how much we have, where it is, and how we store it, it would make us walking targets,' he said. 'I have no doubt that this information about cryptocurrency wallets will leak and fall into the hands of those who shouldn't have it.'”

He also pointed out a contradiction, namely that Drex - the central bank's digital currency project - was halted precisely because the government itself could not guarantee the privacy of user transactions.

Ismael Decor of Declare Cripto shared the view that “the noose is tightening,” citing the new guidelines from the Federal Tax Authority, now referred to as DeCripto, which should make reporting more comprehensive and frequent.

But he warned that although failing to declare cryptocurrencies is not a crime, it constitutes a tax violation. Deliberately lying about amounts or personal data is more serious and may constitute the crime of false consciousness.

Benefits of Crypto Tracking

Kai Mota from Chainalysis presented data from the company, indicating that only 0.14% of identified cryptocurrency transactions in 2024 are related to illegal activities.

In his view, although this number is small compared to the size of the industry, it should not be used as an argument to move away from tracking mechanisms. On the contrary, it is monitoring that helps maintain market integrity and protect those who are in a genuinely vulnerable position.

He cited a landmark case to illustrate this: a mother sold explicit content of her daughter and was eventually caught due to the effective tracking of cryptocurrency transactions. For Mota, such incidents indicate that the transparency of blockchain is a necessary tool in combating serious crime.

At the end of the meeting, the overall feeling was that there are no simple answers. The government has been tracking cryptocurrencies in an accurate manner while requesting users to provide more data. However, it does not offer security guarantees to prevent this information collection from endangering lives.

Users are forced to choose which risk they would rather face between declaring or protecting their privacy. As Marcello summarized: “If you declare, there is a risk. If you do not declare, there are other risks. We must choose which risk to take.”