SUMMARY

• Denmark’s tax authority suggested using “mark-to-market taxation” for crypto investors in its latest proposal.
• The Minister of Taxation aims to introduce the bill in early 2025.

Denmark’s Tax Law Council has proposed taxing unrealized crypto gains under a mark-to-market taxation model, aiming to address asymmetries between how gains and losses are treated. This strategy includes taxing changes in the value of crypto resources annually, even if the resources remain unsold. The council clarified that classifying these gains as capital income would guarantee nonstop taxation and progress fairness in the tax system.

Due to the decentralized nature of cryptocurrencies, the council expressed that traditional tax models have battled to capture gains and losses precisely. As part of the change, the new taxation system would only take effect from January 1, 2026. In the mean time, the Minister of Taxation is planning to present a legislative bill at the starting of 2025. This bill will incorporate the council’s suggestions and introduce obligatory reporting prerequisites for crypto service providers to unveil details of their clients’ transactions.

Mads Eberhardt, a senior crypto analyst at Steno Investigate, revealed that the proposed tax rate on unrealized gains could reach 42%. He cautioned that this modern approach would influence not only future crypto acquisitions but moreover all holdings, including those gotten as far back as Bitcoin’s launch in 2009. Eberhardt depicted the initiative as an aggressive position on digital resources, calling it “a war on crypto.”

This development has drawn consideration from both investors and regulators, with some seeing it as a potential model for other nations to follow. If passed, Denmark’s approach may signal a move in global attitudes toward crypto taxation, particularly as governments investigate ways to regulate and capture revenue from the developing digital economy. Markets are expected to monitor the circumstance closely, as changes in crypto taxation approaches can altogether affect investor behavior.

The upcoming enactment reflects Denmark’s continued focus on fixing control over cryptocurrency transactions, seeking transparency and fairness in the financial framework. In any case, the move has sparked debates over whether taxing unrealized gains undermines one of crypto’s core appeals: financial freedom and decentralized wealth management.