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Will Bitcoin hodlers be the reason more countries adopt wealth taxes?

Opinion by: Robin Singh, CEO of Koinly

Is there a catch for Bitcoin hodlers, with the asset’s price up over 600,000% since the beginning of 2013? 

Perhaps — if governments keep waking up to Bitcoin’s value, the whole “you only pay tax when you sell” mantra could soon be a thing of the past.

What if a wealth tax is the answer for revenue-hungry tax agencies with no time to lose? It’s a yearly tax on a person’s total net worth — cash, investments, property and other assets — minus any debts, applied whether or not those assets are sold or generating income. The idea is to boost public revenue and curb inequality, mainly by taxing the ultra-rich. A wealth tax takes a clip off what you own, not what you earn.

Countries such as Belgium, Norway and Switzerland have had wealth taxes baked into their tax systems for ages, yet some of the world’s biggest economies — like the US, Australia and France — have largely steered clear. 

That might be changing. More governments are eyeing wealth taxes for crypto. In December 2024, French Senator Sylvie Vermeillet took it a step further, suggesting Bitcoin (BTC) be labeled “unproductive,” which would mean taxing its gains every year — whether or not it’s ever sold. 

Yep, every asset holder’s favorite word is unrealized capital gains tax. It would be naive to assume other countries are not thinking about the same idea. 

With Bitcoin’s significant gains and industry executives such as ARK Invest’s Cathie Wood eyeing a $1.5-million price tag by 2030, I’d bet a magic 8-ball would say, “Signs point to yes.”

The growing global interest in wealth tax

It might seem far-fetched, but it is hard to ignore the gains. The average long-term Bitcoin holder is already sitting on significant profits.

The incentive is obvious. Switzerland’s wealth tax goes up to 1% of a portfolio’s value, and governments know there is plenty to collect.

Countries catch on — sooner or later. Consider how capital gains tax became the norm.

The US introduced capital gains tax in 1913, the UK jumped on board 52 years later in 1965, and Australia followed in 1985. 

Governments likely considering the wealth tax

Governments are likely entertaining the idea — whether they admit it or not. If any country seriously considers it, Germany could be a prime candidate, even though it scrapped its wealth tax back in 1997.

Recent: Ukraine floats 23% tax on some crypto income, exemptions for stablecoins

In July 2024, offloading 50,000 seized BTC at $58,000 might have seemed like a smart move for the German government, but when Bitcoin hit $100,000 just months later in December, it became clear they left a fortune on the table. 

In retrospect, a costly mistake…

Will this be remembered as a blunder on par with Gordon Brown selling half of the UK’s gold reserves at $275 an ounce? 

Imposing such a rule on the wealthy comes with obvious risks.

To understand the real effect of taxation on a country, just follow the money — specifically, where millionaires are moving. Recent data shows that high-net-worth individuals are leaving countries like the United Kingdom in droves, heading for tax-friendly havens like Dubai.

The potential repercussions of a wealth tax

Will nations risk losing these individuals to tap into unrealized gains on Bitcoin and other assets?

Bitcoin is volatile and full of unknowns. While some events could lead to massive losses, governments may still push forward with policies that ultimately drive away millionaires, only to realize the trade-off wasn’t worth it. 

Conversely, US President Donald Trump recently signed an executive order establishing a Bitcoin Strategic Reserve — a clear nod to the hodl mentality. No doubt, this has other nations considering a similar move.

If nations are embracing the hodl mindset, could that mean wealth taxes are off the table in those countries? Only time will tell.

One thing is sure: Bitcoin hodlers have amassed enough wealth to put themselves on the radar of tax authorities. Whether this sparks fundamental policy changes or just political grandstanding, the crypto community won’t sit back quietly.

Opinion by: Robin Singh, CEO of Koinly.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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EthereumMax investors secure partial win in class-action lawsuit

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EthereumMax investors secure partial win in class-action lawsuit

EthereumMax investors secure partial win in class-action lawsuit

Four state-level lawsuits against three celebrities and individuals tied to the EMAX token may proceed after a California judge’s ruling.

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Funding effort for Roman Storm grows as defense preps for possible retrial

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Funding effort for Roman Storm grows as defense preps for possible retrial

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Donations to the embattled software developer increased after Wednesday’s partial verdict and the possibility of a retrial.

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JD Vance warns against UK going down ‘dark path’ of losing free speech during meeting with David Lammy

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JD Vance warns against UK going down 'dark path' of losing free speech during meeting with David Lammy

JD Vance has said he does not want the UK to go down a “very dark path” of losing free speech during a meeting with the foreign secretary at his country estate.

The US vice president has previously raised concerns that free speech is being eroded in the UK.

However, during a two-day visit to David Lammy’s grace and favour 115-room mansion, Chevening House in Kent, Mr Vance kept his criticism a bit more low key.

Asked about free speech in the UK during a televised meeting of the two men, Mr Vance said he has “raised concerns” about free speech in his own country and accused the West of “censoring rather than engaging” with different opinions.

He said: “I think the entire collective West, the transatlantic relationship, our NATO allies, certainly the United States under the Biden administration, got a little too comfortable with censoring rather than engaging with a diverse array of opinions. So that’s been my view.

“Obviously, I’ve raised some criticism, concerns about our friends on this side of the Atlantic.

“But the thing that I’d say to the people of England or anybody else, to David, is many of the things that I worry most about were happening in the United States from 2020 to 2024.

“I just don’t want other countries to follow us down what I think was a very dark path under the Biden administration.”

Mr Lammy, who has struck up the unlikely relationship over the past few months, did not comment on Mr Vance’s indirect criticism.

The two politicians went fishing on the Chevening estate. Pic: Reuters
Image:
The two politicians went fishing on the Chevening estate. Pic: Reuters

Mr Vance revealed he caught a few fish but Mr Lammy was not so successful. Pic: Reuters
Image:
Mr Vance revealed he caught a few fish but Mr Lammy was not so successful. Pic: Reuters

In February, when Sir Keir Starmer was carrying out a similar televised meeting with Donald Trump in the Oval Office, Mr Vance said “infringements on free speech” now do not just affect the British, but also American tech companies – “and by extension American citizens”.

Sir Keir quickly interjected, saying: “We’ve had free speech for a very long time, it will last a long time, and we are very proud of that.”

Mr Vance and his family are staying with Mr Lammy at Chevening for two days before heading to the Cotswolds for a summer holiday.

The vice president was effusive in his praise for the grand estate that comes with Mr Lammy’s job, saying “being here lifts up the human spirit” as he thanked the “people of England” for having such a “beautiful place for foreigners like me to come and talk about the issues of the day”.

He added that he “loves the UK”.

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The two politicians went fishing ahead of their meeting, with Mr Vance revealing he caught a few, while all three of his children caught a fish but Mr Lammy did not.

He also said his children had fallen asleep on the floor of the large house, and his three-year-old daughter kept asking if she would see Mr Lammy’s daughter.

Mr Lammy posted a picture of him and Mr Vance laughing as they fished, saying it was a “real pleasure” to welcome the Vance family and the vice president “gave me fishing tips, Kentucky style”.

JD Vance confirmed he will holiday in Scotland next week in a trip that could see up to 1,000 police officers deployed as part of security efforts.

He confirmed his Scottish trip during talks with Mr Lammy on Friday.

Sky News understands the Vance family are likely to visit Ayrshire, the same area where Mr Trump recently stayed where he secured a trade deal with the European Union.

Police sources have suggested approximately 1,000 officers will be working across the visit to ensure the vice president and his loved ones are safe, Sky News’ Scotland correspondent Conner Gillies reported.

Police Scotland declined to comment on the specifics.

It is understood the Vance family will not be staying at Trump Turnberry, the luxury Ayrshire resort owned by the US president himself.

A Police Scotland spokesperson said: “Planning is under way for a potential visit to Scotland by the vice president of the United States.

“Details of any visit would be for the White House to comment on, however it is important that we prepare in advance for what would be a significant policing operation.”

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