Brazil’s data protection agency (ANDP) has upheld its decision to limit cryptocurrency compensation related to the World ID project due to excessive concerns over users’ privacy. 

The National Data Protection Authority of Brazil (ANDP) stated on March 25 that it is not going to revoke the ban on the financial incentives for users who share biometric data for World ID. This comes after the agency carried out an investigation into the much-debated project that seeks to use iris imaging to assign identification numbers to users. ANDP also underscores that the financial compensation in Worldcoin (WLD) of any World ID generated through the use of the iris scans in Brazil must remain frozen.

Despite requesting ANDP review the ban, Tools for Humanity, which develops the World ID, did not approve the petition. If it continues to collect data, the company now faces a fine of 50,000 Brazilian reais, or approximately $8,800 per day.

In a translated version, the announcement noted:

“(i) the solutions presented by the regulated entity do not meet the ANPD’s determination, since the financial consideration for the collection of sensitive personal data is still characterized; and (ii) the change in the legal hypothesis of consent in the present case is not admissible.”

Concerns over privacy and consent

ANDP started investigating the World ID project in November 2024 because the provision of monetary rewards could distort users’ decisions to share their biometrics. The project, previously called ‘Worldcoin,’ enables users to generate a World ID through iris scans. The scans create a digital passport that allows users to prove their identities when engaging in online activities.

While it is part of the global trend toward the creation of digital ID solutions, the Brazilian data protection agencies have expressed concerns regarding the collection, storage, and usage of biometrics. Another concern raised by the ANDP was that, through the use of incentives, the users may be pressured to provide their consent. 

According to Brazilian law, consent to process biometric data must be “free, informed, and unequivocal,” and the processing of sensitive data must follow all privacy regulations. ANDP also expressed concern over the impossibility of users deleting their data once it is collected, an aspect that shows the irreversibility of information collection.

Besides the World ID controversy, Brazil is increasingly regulating stablecoins, which are another key part of the cryptocurrency industry. The country’s central bank has recently discussed imposing measures to limit stablecoins to self-custody wallets due to possible money laundering and tax evasion.  This proposal has raised concerns, especially from players like Coinbase, who believe these regulations could potentially stifle innovation and force businesses to go towards less transparent jurisdictions.

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The US Senate is preparing to hold a final vote on March 27 to nullify the Internal Revenue Service’s (IRS) broker reporting rule for DeFi operators.

If approved, the resolution could be sent to President Donald Trump’s desk as early as March 28 for signing, according to Fox reporter Eleanor Terrett reported on March 25, citing three people familiar with the matter.

The vote follows a procedural requirement after the Senate passed the same joint resolution in a bipartisan supermajority on March 4. 292 lawmakers voted to overturn the broker rule, while 132 opposed it.

The broker rule, finalized by the IRS in December 2023, aimed to broaden tax reporting obligations by redefining “brokers” to include digital asset platforms, including DeFi front-end interfaces. 

Under the regulation, entities classified as brokers would be responsible for implementing Know Your Customer (KYC) standards, monitoring user activity, and reporting transaction data to the IRS.

Community pushback

The rule was introduced as part of the former President Joe Biden administration’s broader strategy to close tax gaps associated with crypto transactions and enhance visibility into blockchain-based financial activity.

Since its introduction, the IRS rule has been the focus of industry opposition, with developers and advocates warning that DeFi infrastructure cannot feasibly comply with broker-level surveillance and reporting requirements.

In December, the decision prompted a joint lawsuit by the Blockchain Association, the DeFi Education Fund, and the Texas Blockchain Council challenging the rulemaking. The entities said that the rule “risks crippling the US digital asset sector.” 

Blockchain Association’s head of legal, Marisa Coppel, said amid the lawsuit that the Treasury has gone beyond its statutory authority in expanding the definition of “broker” to include providers of DeFi trading front-ends. She added that these interfaces do not affect transactions. 

Additionally, critics have highlighted that DeFi protocols lack centralized control or custodial authority over user funds, rendering the expansion of the broker rule useless.

If Trump signs, the rule will be formally repealed, removing the expanded definition of brokers from IRS enforcement policy.

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