EU Crypto Tax Forecast Faces Skepticism from Circle Policy Lead

The European Union's plan to generate billions in revenue from crypto taxes has sparked concerns that it may not meet its forecasted projections.

Patrick Hansen, the EU strategy and policy lead at Circle, believes that a transaction-based crypto tax would likely be ineffective due to users migrating towards decentralized finance (DeFi) protocols.

Hansen points out three structural weaknesses in the Commission's modeling: incomplete data from the DAC8 framework, reliance on early estimates, and the need for unanimous Council approval and harmonized EU tax base.

The proposed transaction-based levy of 0.1% could generate between $3.5 billion and $4.7 billion annually, while a capital gains tax on realized profits could raise an estimated $1.2 billion to $2.8 billion per year.