Privacy at risk? Increased tracking of Bitcoin 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: Crypto market experts were direct on stage at the Blockchain Conference Brazil this Saturday (29): the Brazilian government has already managed to track Bitcoin with relative ease and is working to further enhance its oversight power.

The federal prosecutor Alexandre Senra opened the discussion by showing how public cases, such as the GAS Consultoria scam led by the “Pharaoh of Bitcoin”, can be easily traced on the blockchain. He showed how the pyramid scheme operator still controls a wallet with 1,300 BTC ( equivalent to R$ 630 million ) and that, in January of this year, he sent 24 BTC to a deposit wallet of a certain exchange's brokerage.

According to him, although the State cannot seize bitcoins without access to private keys, it is possible to monitor addresses and be alerted when there are significant movements, such as sending to a centralized entity, like an exchange, and from there, demand the seizure of the amounts.

The government's ability to track cryptocurrency transactions is expected to increase significantly next year, as the new rules from the Central Bank for the crypto sector require, for example, that exchanges report users' self-custody wallets.

The negative side of crypto tracking

In the view of Marcello Paz from PRO Hash, the increase in state control over the crypto market requires a choice from users: to provide the information demanded by the government, dealing with the risk of having their data exposed in a potential leak, or to stay off the radar, without interacting with centralized entities or declaring transactions, assuming the risk of being caught and fined.

Although contradictory, he advocates for the second option. “If the State knows how much we have, where it is, and how it is safeguarded, it turns us into walking targets,” he stated. “I have no doubt that this information about crypto wallets will leak and end up in the hands of those who shouldn't have it.”

He also pointed out the contradiction that Drex — the Central Bank's digital currency project — was halted precisely because the government itself could not ensure the privacy of users' transactions.

Ismael Decol, from Declare Cripto, shared the vision that “the noose is tightening”, citing the new regulatory instruction from the Federal Revenue, now called DeCripto, which is expected to make declarations more complete and frequent.

But it warned that, although failing to declare cryptocurrencies is not a crime in itself, it constitutes a tax offense. Deliberately lying about amounts or personal data is even more serious and can characterize the crime of ideological falsehood.

The bright side of tracking

Caio Motta, from Chainalysis, presented data from the company indicating that only 0.14% of cryptocurrency transactions identified in 2024 were linked to illicit activities.

For him, this number, although small compared to the size of the industry, should not be used as an argument to dismiss tracking mechanisms. On the contrary, it is precisely the monitoring that helps preserve the integrity of the market and protect people in real situations of vulnerability.

He cited an emblematic case to illustrate this point: a mother who sold explicit content of her own daughter and ended up being caught precisely due to the efficient tracking of crypto transactions. For Motta, episodes like this show that the transparency of blockchain is an essential tool in combating serious crimes.

In conclusion, the general feeling was that there are no easy answers. The government is already tracking cryptocurrencies accurately while demanding more data from users. However, it does not provide guarantees of safety so that this information gathering does not put lives at risk.

Between declaring or preserving one’s own privacy, users find themselves compelled to choose which risk they prefer to face. As Marcello summarized: “If you declare, there is risk. If you do not declare, there are other risks. We have to choose which fight to take on.”