Opinion: Robin Singh, CEO of Koinly
If Brazil’s recent move is anything, then the code could be the first tax lever the government will pull when scrambling for more revenue.
In June, Brazil abolished the tax exemption for minor crypto profits, introducing a 17.5% flat tax on all capital gains from digital assets, regardless of amount. The decision was part of a broader effort by the Brazilian government to strengthen revenues through increased taxation in financial markets.
This is more than a local tax adjustment. There is a clear pattern emerging: governments are finding ways to withdraw more taxes from their asset classes. Around the world, policymakers see crypto as a revenue opportunity.
Global patterns are beginning to emerge
It wasn’t until 2023 that Portugal brought a 28% tax on cryptocurrency profits held for less than a year.
The current problem is the period for countries with encryption-friendly tax policies to hold the line before chasing suits, then tightening the screws.
For example, Germany currently exempts cryptocurrency benefits from capital gains tax if the assets are held for more than a year. Even holders under a year will remain tax-free if an increase of up to 600 euros ($686) per year.
Meanwhile, the UK offers a broader range of £3,000 ($3,976) capital gains for all assets, including crypto, with tax-free allowances for all assets, down 50% from £6,000 in 2023, indicating the potential for further reductions in the future.
Retail Investor Grayzone is coming to an end
That may seem like a slight change, but further reducing the £3,000 threshold indicates that 12% of UK adults currently hold crypto, especially when there are recent Financial Conduct Authority (FCA) data.
It’s hard to imagine it completely off the table, especially as the UK government’s debt increases.
The era of retail crypto investors enjoying the grey zone of regulatory generosity is closing. As the crypto market matures and prices continue to skyrocket, the government is paying attention to media headlines covering the explosive growth of crypto.
This is especially true in emerging markets that are increasingly closing budget gaps without causing political backlash from more visible or controversial tax increases.
No other assets have rivaled Bitcoin’s average annual return rate of 61.2% over the past five years.
Cryptocurrency is an easy target for governments
Luckily, Crypto is a fairly simple tax goal for the government. It is often perceived as benefiting primarily the wealthy, speculative and perceived. Taxation is less controversial with the public, but it also brings downsides to everyday investors and startups, especially.
Related: Japan’s Crypto Tax Overhaul: What Investors Should Know in 2025
For example, Brazil’s 17.5% structure hit disproportionately hard on small traders.
Large institutions can absorb costs or move to jurisdictions with more advantageous rules, but everyday users, including those using crypto to save inflation-prone economies, are borne by the costs.
If other governments are more likely to follow the Brazilian and Portuguese examples, the era of low- or tax-free crypto investments could end.
The question isn’t whether other crypto-friendly countries will strengthen their crypto tax grip. It’s how fast and difficult it is.
Opinion: Robin Singh, CEO of Koinly.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
