Circle warns EU $23B crypto tax estimate may be overstated

Patrick Hansen, Circle’s EU strategy and policy lead, warned that the European Commission’s estimate of up to $23 billion in crypto tax revenue for the 2028–2034 budget cycle may be overstated. He said a transaction levy would shift trading away from taxable centralized platforms toward decentralized finance, self‑custody wallets and trading venues outside the bloc.

A leaked Commission services paper sets out two options for member states. One is a 0.1% levy on the value of crypto transactions, to be collected and reported by crypto‑asset service providers, which the paper estimates could raise $3.5 billion to $4.7 billion a year. The other is a capital gains tax on realized crypto profits, estimated at $1.2 billion to $2.8 billion annually. The Commission combined those ranges to project totals that could approach $23 billion across the seven‑year cycle and noted results will depend on market volatility.

The paper says stablecoins used as means of payment would likely be excluded from the transaction levy and that dollar‑pegged tokens would generally fall outside capital gains rules because they show little price movement. Under the transaction model, crypto‑asset service providers would act as the points of collection and reporting.

Hansen pointed to three structural weaknesses in the Commission’s models. First, reliable reporting under DAC8, the EU’s crypto data‑sharing framework, is not expected until 2027, so early forecasts rely on incomplete inputs. Second, the proposal requires unanimous approval by the Council and a harmonized tax base across member states, conditions that may be hard to secure. Third, behavioral responses by users and service providers could reduce the volume on centralized venues that the levy would target.

Hansen warned: “Any transaction‑based crypto tax would likely accelerate migration towards non‑taxed channels and non‑taxed assets. That would significantly reduce the revenue potential on which these projections are based.” He urged policymakers to account for those shifts when assessing projected receipts.

Political dynamics could affect whether the measures are adopted. France has pressed for new EU revenue sources, while jurisdictions with heavy exchange activity, such as Malta, may resist added compliance burdens. Cyprus, holding the rotating Council presidency, plans to present a revised budget proposal around June 10; that document will indicate whether the crypto tax remains a priority and how it will interact with the review of the Markets in Crypto‑Assets regulation.

Commission officials cautioned that the headline figures depend on market conditions and on how users and providers respond to new rules. Hansen’s assessment highlights the risk that projected revenues may not materialize if trading migrates to channels outside the Commission’s collection points.