BRASILIA - Brazil's tax authority will soon call foreign crypto exchanges not based in the country to explain their operations and how they cooperate with local service providers, government officials told Reuters on Monday.

The tax revenue service is expected to publish this week an ordinance summoning these companies for further information. Unlike exchanges formally established in Brazil, they are not obligated to report transactions conducted on their platforms.

"It's an area of concern for us to understand first how they operate here, whether there's any illegality or not. We are also concerned about having information on Brazilian wealth subject to taxation here," said Andrea Chaves, deputy secretary of inspection at the federal revenue service.

Wagner Lima, risk management coordinator at the revenue service, said the government also aims to understand how these exchanges cooperate with service providers in the country to ensure they provide information as required by the tax revenue service under a 2019 regulation.

Among the exchanges not based in Brazil but operating in the country and even having Portuguese-language websites are Binance, Coinbase, OKX, and KuCoin.

The call comes amid a surge in crypto assets in Latin America's largest economy.

From January to July 2023, Brazilians declared 133.6 billion reais ($24.6 billion) in crypto assets, a 36.6% increase from the same period the previous year, according to the latest data from the revenue service, which is working on a technological update to release new figures.

Of this total, 14.5 billion reais were declared using exchanges abroad, a 51.2% growth on the same basis. In this case, providing information to the government depends on taxpayers, whether individuals or legal entities. ($1 = 5.4245 reais) (Reporting by Marcela Ayres, Editing by Louise Heavens)