The European Commission wants to take a tiny cut of every crypto trade happening within its borders. On May 29, the Commission published a document outlining a proposed 0.1% transaction tax on crypto assets, a levy it estimates would generate between €3 billion and €4 billion per year based on 2025 market projections.

The crypto transaction tax is just one piece of a much larger revenue puzzle. The Commission’s document also floated an alternative approach: a capital gains tax on crypto, projected to bring in between €1 billion and €2.4 billion annually using more conservative estimates derived from 2022 data.

Both crypto-specific proposals sit inside a broader taxation framework that also targets digital services and online gambling revenues. Together, the full package could generate up to €11 billion per year, or somewhere between €20 billion and €28 billion across the seven-year budget cycle running from 2028 to 2034.

The Commission was notably candid about the challenges baked into these estimates. It cited crypto market volatility, the difficulty of pinpointing where users are actually located, and persistent gaps in on-chain data as factors that make precise revenue forecasting difficult.

Patrick Hansen, Circle’s EU policy lead, raised concerns that a transaction levy applied to centralized platforms could simply push traders toward decentralized alternatives, where enforcement is a work in progress.

The EU seems at least partially aware of this dynamic. The DAC8 reporting rules, which took effect on January 1, 2026, already require crypto-asset service providers, or CASPs, to report transaction data for EU-resident users to tax authorities. That infrastructure creates a foundation for enforcement, but it only covers the platforms that are already playing by the rules.

For market makers, algorithmic traders, and high-frequency operations that execute thousands of trades daily, even a fraction of a percent compounds fast. Those participants provide the liquidity that keeps spreads tight and markets efficient.

The capital gains alternative carries its own compliance burden. Tracking cost basis across wallets and exchanges is already a headache for European crypto holders, and layering a formal EU-level tax on top of existing national capital gains regimes could create additional complexity.

There is a significant political hurdle standing between these proposals and reality. Any new EU-wide tax requires unanimous consent from all 27 member states. Countries with friendlier crypto policies, or those competing to attract blockchain businesses, have strong incentives to block a measure that could drive companies and capital elsewhere.

The proposals remain in an evaluative phase with no formal legislative timeline.