Italy plans to raise the capital gains tax on Bitcoin from 26% to 42%. This decision is part of the government’s efforts to finance costly election promises while reducing the fiscal deficit.

Deputy Finance Minister Maurizio Leo announced the change during a conference call today (Wednesday). He indicated that the move is in response to the increasing popularity of Bitcoin, referring to it as a “spreading phenomenon.” This statement was reported by Bloomberg.

Regulatory Changes Affect Bitcoin

Other countries have previously attempted to tax cryptocurrency trading, but these efforts have often failed to significantly boost government revenues. For example, India introduced stringent digital asset taxes two years ago. This led to a decline in trading volumes, as many local investors shifted to offshore platforms to avoid the taxes.

Italy's announcement comes at a time when the European Union is preparing to implement new regulations for cryptocurrencies. Known as MiCA, this regulatory framework is expected to be fully in effect by the end of this year.

⚡️JUST IN: 🇮🇹 Italy is reportedly considering raising its capital gains tax on #Bitcoin and other cryptos from the current 26% to as high as 42%.@paoloardoino, any chance you can stop this? 🤨 pic.twitter.com/v7cvpWiDyY

— Satoshi Club (@esatoshiclub) October 16, 2024

Despite the tax increase, Bitcoin's value has risen. As of 12 pm in London on Wednesday, Bitcoin was trading 1.8% higher. The cryptocurrency has experienced a 17% increase in value over the past month.