Czech Republic to exempt ‘crypto’ capital gains tax in new law

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Digital currency investors in the Czech Republic will no longer have to pay capital gains taxes if they hold their digital assets for at least three years.

Czech lawmakers in the Chamber of Deputies, the lower house of the bicameral parliament, passed the bill last week. According to Prime Minister Petr Fiala, the bill is part of the country’s implementation of the European Union’s Markets in Crypto Assets (MiCA) framework.

One of the bill’s stipulations is the exemption of capital gains taxes for digital assets held for at least three years. Czechs also don’t have to report their digital asset transactions in their tax filings if the total sum transacted doesn’t exceed 100,000 koruna ($4,200) annually.

“This means that, for example, buying coffee for bitcoin or satoshis will no longer be a tax transaction. We make life easier for people and support modern technologies,” the PM stated.

The new tax framework has been welcomed by the local digital asset community, who believe it will further fan adoption in the Central European nation. However, the new taxes are contradictory: while they claim to boost digital asset payments by raising the taxation threshold, they also systematically encourage users to ‘hodl‘ their digital assets for years in speculation.

The new tax framework mirrors proposals in other countries where lawmakers have been seeking to formalize digital asset taxes.

In Russia, the president recently signed into law a bill that treats digital assets as property, exempting profits from value-added tax (VAT) and switching it for income tax, capped at 13% for earnings below $22,400 and 15% for any amount above this. South Korea is also on a similar path, with legislators proposing raising the taxation threshold from $1,800 to $36,000, aligning it with the stock market. However, South Korea’s lawmakers recently postponed the implementation to 2027.

Besides the new tax proposals, the Czech Republic’s new law also bars banks from denying virtual asset service providers (VASPs) any services. For years, the sector has been blackballed by the banking system despite its ever-rising intricate links to the financial and payments sector.

Some experts have criticized the new law’s ambiguity. The local subsidiary of Big Four accounting firm KPMG opined that it does not offer a definition of digital assets and relies on Markets in Crypto-Assets (MiCA) regulation, which is narrow and could exclude some tokens. Additionally, it doesn’t specify the methods to be used to determine the length of time an investor has held the asset.

The Czech Republic is home to a number of global digital asset successes, led by Trezor, one of the world’s largest hardware wallet makers.

Argentina opens access to foreign digital asset ETFs

Elsewhere, the Argentine securities watchdog has expanded local investors’ access to global investment products, including digital asset exchange-traded funds (ETFs) issued in other countries.

The National Securities Commission (CNV) announced that it now allows local institutions to issue CEDEARs of ETFs that track the performance of variable-income assets such as stock indices, digital assets, and precious metals like gold.

CEDEARs, or Certificados de Depósito Argentinos, are financial instruments that represent shares of foreign companies and trade on Argentina’s main stock exchange. They allow Argentine investors to invest indirectly in foreign firms without the need for an offshore account. They are Argentina’s equivalent of American Depositary Receipts (ADRs) in the U.S.

Argentine financial laws changed six years ago to permit ETF CEDEARs, but this marked the first time that they had actually been issued, revealed CNV president Roberto Silva as he approved five new products.

Two of the new CEDEARs track digital assets ETFs issued in the U.S., while the other three track gold, the Chinese stock market index, and the S&P 500 index.

“It is a pleasure to announce these first approvals, which constitute new investment options provided for in this very innovative law. With these initiatives, we are raising Argentina to the standards of the most developed international markets,” commented Silva.

Digital asset spot ETFs launched in the U.S. market earlier this year, with BTC debuting in January and Ether in July. Collectively, they have raised billions of dollars. However, they have resulted in a concentration of digital assets in the hands of Wall Street’s biggest financial giants. For instance, BlackRock’s (NASDAQ: BLK) iBIT ETF controls $34 billion of BTC alone.

Despite the risks, other nations have aped in, with Thailand and Hong Kong among those that have launched similar products this year. However, both countries have failed to replicate the success of the U.S. products.

Still, others like Japan and South Korea remain apprehensive. Local financial experts have revealed that Japan’s Financial Services Agency (FSA) remains conservative and is unlikely to approve the ETFs, while South Korea has opted first to watch how the existing products fare.

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