Circle executive Patrick Hansen has criticized a German tax proposal that would impose a 50% substitute tax penalty on cryptocurrency sales if investors fail to provide credible purchase documentation. Hansen warns the rule will disproportionately harm everyday retail investors who lack the technical means to track acquisition costs, potentially forcing them to pay taxes on losses. While German legislators aim to close tax loopholes, experts warn of severe liquidity risks for transfers to German exchanges.
Patrick Hansen's criticism of the proposal
- ▪Patrick Hansen, Senior Director of EU Strategy & Policy at Circle, criticized the 50% crypto tax penalty proposed by Germany's Federal Ministry of Finance (BMF), warning it would raise costs, create legal uncertainty, and risk pushing business activity abroad
- ▪Patrick Hansen warned that the German proposal for a 50% crypto tax penalty will disproportionately harm less crypto-savvy retail investors who lack the technical experience to cleanly document their acquisition costs
- ▪Patrick Hansen stated that the implicit assumption of cryptocurrency prices doubling under the German tax proposal by the Federal Ministry of Finance is high, noting that Bitcoin was at a lower price than a year prior
Germany's proposed cryptocurrency tax reform
- ▪Germany's Federal Ministry of Finance proposed a tax reform imposing a 50% substitute assessment basis on cryptocurrency sales without purchase proof, assuming purchases occurred after December 31, 2026.
- ▪German legislators described the crypto tax reform proposed by the Federal Ministry of Finance (BMF) as a measure to close perceived loopholes in cryptocurrency taxation and align its treatment with other asset classes
German tax documentation risks
- ▪Dr. David Hötzel highlighted that protecting existing holdings depends on reliable documentation, warning that Germany's proposed 50% tax base can trigger high provisional deductions even in low actual profit cases
- ▪Dr. David Hötzel, Associated Partner at Poellath, stated that Germany's proposed 50% tax consideration is not final but warned it creates significant liquidity risks for transfers from self-custody wallets to German exchanges
Bitcoin price fluctuations
- ▪Bitcoin's price crossed above $87,000 during the early trading sessions of the week of September 21, 2026.
- ▪Bitcoin's price hovered around $83,800 to $84,000 as of Friday, September 25, 2026, representing an 8% gain over the prior seven days despite a modest daily decline.
US spot Bitcoin ETF inflows
- ▪Spot Bitcoin exchange-traded funds in the United States recorded $191 million in net inflows on Thursday, September 24, 2026, extending a six-day positive flow streak to $2.8 billion.
- ▪During the trading week of September 21–25, 2026, U.S. spot Bitcoin exchange-traded funds captured $2.39 billion in net inflows, led by BlackRock’s iShares Bitcoin Trust with $1.16 billion.
Impact of rising Treasury yields
- ▪The 10-year U.S. Treasury yield surpassed 5.2% on Friday, September 25, 2026, reaching its highest level since 2007 and creating headwinds for Bitcoin's upward price momentum.
- ▪Elevated government bond yields redirected capital away from Bitcoin and other speculative assets by enhancing the appeal of fixed-income investments.
Debatable claims
- ▪Requiring traditional purchase documentation is an inappropriate way to tax decentralized cryptocurrencies
- ▪A 50% substitute tax assessment is a proportionate response to undocumented crypto sales
- ▪Germany's proposed 50% crypto tax penalty unfairly burdens retail investors
- ▪Germany's proposed crypto tax reform will drive digital asset businesses abroad
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