Opinion: Robin Singh, CEO of Koinly
Have you caught a Bitcoin Hodler with assets priced over 600,000% since the beginning of 2013?
Perhaps – if the government continues to awaken to the value of Bitcoin, the entire “You pay taxes only when you sell” mantra could soon become a thing of the past.
If wealth taxes are the answer to income-hungry tax agencies, what happens if they don’t have time to lose? This is an annual tax on a person’s total net worth, such as cash, investments, assets, and other assets. Whether these assets are on sale or generating revenue, they are deducting their obligations and deducting their obligations. The idea is to increase public income and inequality in restraint, primarily by taxing the ultra-rich people. Wealth tax removes clips from what you own, not what you earn.
Countries such as Belgium, Norway and Switzerland have earned wealth taxes on their tax system due to their age, but some of the world’s largest economies, such as the US, Australia and France, are largely clear.
That may be changing. More governments are paying attention to the cryptocurrency wealth tax. In December 2024, French Sen. Sylvie Vermeirette went a step further, suggesting that Bitcoin (BTC) is being labeled “unproductive.”
Yes, the favorite word for all asset owners is the unrealized capital gains tax. It’s naive to assume that other countries are not thinking about the same idea.
With Bitcoin’s huge profits and industry executives such as Ark Invest’s Cathie Wood, looking at the $1.5 million price tag by 2030, the magical eight ball would say “the sign points to yes.”
Growing global interest in wealth tax
It may seem like a bold thing, but it’s hard to ignore profits. The average long-term Bitcoin holder has already made significant profits.
The incentive is clear. Swiss wealth tax reaches 1% of the value of the portfolio, and the government knows there is a lot to collect.
Countries – Sooner or later. Think about how the capital gains tax has become the norm.
The US introduced the capital gains tax in 1913, the UK flew on board in 1965 52 years later, and Australia continued in 1985.
The government is probably considering wealth tax
The government is probably entertaining the idea – whether they acknowledge it or not. Despite abolishing the wealth tax in 1997, Germany could become a major candidate if it is seriously considering it.
Recently: Ukraine has raised 23% tax on some crypto income and stable exemption
Loading the $50,000 seized BTC at $58,000 in July 2024 may have seemed a wise move for the German government, but when Bitcoin hit $100,000 in December, they left a huge sum of money on the table.
Looking back, it’s a costly mistake…
Is this remembered as a blunder on par with Gordon Brown selling half of the UK’s gold reserves for $275 a ounce?
There is a clear risk to impose such rules on wealthy people.
To understand the true effect of taxation on a country, you simply follow where billionaires are moving, especially money. Recent data shows that high-net individuals have left countries like the UK in large numbers and headed towards tax-friendly shelters like Dubai.
Potential impacts of wealth tax
Do nations risk losing these individuals exploiting the unrealized benefits of Bitcoin and other assets?
Bitcoin is unstable and full of unknowns. While some events could lead to massive losses, the government could ultimately advance policies that drive away billionaires, but simply recognize that the trade-offs are unworthy.
Conversely, US President Donald Trump recently signed an executive order establishing a Bitcoin Strategic Reserve. Without a doubt, there are other countries considering a similar move for this.
If countries embrace the HODL idea, could that mean that wealth taxes are off the table in those countries? Only time can be seen.
One thing is certain, Bitcoin Hodler has accumulated enough wealth to put himself on the radar of tax authorities. Whether this causes fundamental policy changes or simply political grandeur, the crypto community should not sit quietly.
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.
