Hungary plans to slash the tax on cryptocurrency earnings by 50% from next year in an effort to encourage investors to declare income from trading digital tokens such as Bitcoin.
The government said it will lower the rate on such earnings to 15% from 30.5% starting in 2022, which would bring it in line with capital gains levies on stocks. The impetus appears to be fears among officials that investors are shielding crypto gains from authorities because of the higher tax rate.
In 2021, growing interest from financial institutions has helped propel the total cryptocurrency market capitalization to over $2.5trillion this week – an increase of almost 930 % on last year.
Banks like Goldman Sachs and Morgan Stanley have already begun trading cryptocurrencies while other financial giants like Citigroup have signaled their interest in getting into the crypto market.
“There are different options from our perspective and we are considering where we can best service clients,” Itay Tuchman, Citigroup’s global head of foreign exchange told the Financial Times on Friday
“We shouldn’t do anything that’s not safe and sound. We will jump in when we are confident that we can build something that benefits clients and that regulators can support,” he told the newspaper.
In another vote of confidence in cryptocurrencies, the European Investment Bank announced last week that they would be issuing their first digital bond offered on a public blockchain using the Ethereum network.