Circle Warns EU’s $23B Crypto Tax May Falter Due to DeFi Migration
CRCL•Circle’s EU policy lead warns the European Commission’s $23 billion crypto tax forecast for 2028–34—based on a 0.1% transaction levy generating $3.5–4.7 billion yearly plus $1.2–2.8 billion in capital gains tax—is overstated. Hansen warns data gaps until 2027, need for unanimous Council approval, migration to self-custody, DeFi or non-EU venues slash revenue.
1. EU Crypto Tax Forecast
The European Commission projects up to $23 billion in crypto tax revenue between 2028 and 2034 based on two models: a 0.1% transaction levy and a capital gains tax on realized profits. Officials estimate the transaction levy could generate $3.5 to $4.7 billion annually, while capital gains taxes might raise $1.2 to $2.8 billion per year.
2. Levy Models Explained
Under the transaction-based model, crypto-asset service providers would collect a 0.1% fee on all crypto movements, excluding stablecoins used as payments. The capital gains tax model would target profits on realized crypto assets, with dollar-pegged tokens likely exempt due to minimal price movements.
3. Circle’s Pushback
Circle’s EU policy lead argues the revenue outlook is overstated, highlighting that reliable DAC8 reporting data will not be available until 2027. The plan also faces the need for unanimous approval from all EU member states and risks user migration to self-custody wallets, DeFi platforms and non-EU exchanges, which could significantly erode taxable volume.
4. Next Steps
Cyprus, holding the rotating Council presidency, is scheduled to present a revised budget proposal by June 10, which will determine whether the crypto tax is included. The outcome will also influence ongoing discussions under the EU’s Markets in Crypto-Assets regulatory review.
