The Czech Republic has enacted a law exempting Bitcoin holdings of over three years from capital gains tax.
This comes after Petr Pavel, the President of the Czech Republic, signed a landmark cryptocurrency legislation into law yesterday. The newly signed legislation provides the country with much-needed regulatory clarity on crypto assets.
Bitcoin Holdings Over Three Years Are Now Tax-Exempt
One major aspect of the newly signed law is the exclusion of Bitcoin holdings of over three years from capital gain tax. As previously reported, the country’s parliament unanimously passed this tax exemption bill in December 2024.
Notably, this legislation is also applicable to crypto assets acquired before 2025 if investors sell them under specified conditions in subsequent tax years.
Crypto transactions worth around 100,000 CZK ($4,100) are tax-exempt. Henceforth, crypto traders are not required to report these transactions.
Czech Top Crypto Organization Reacts
Reacting to the development, the Czech Cryptocurrency Association (also referred to as CKMA) disclosed that it played a significant role in preparing the legislation. According to the association, the newly signed legislation, which seemed unthinkable in the past, earned the support of all policymakers.
It mentioned a critical part of the law, noting that crypto companies can access traditional financial services upon obtaining the necessary approval.
The legislation is part of Czech’s efforts to align itself with Europe’s Markets in Crypto-Assets (MiCA) framework.
Last year, the European Securities and Markets (ESMA) provided the final guidance on MiCA laws for EU countries, with the regulation fully implemented on December 30.
The MiCA regulatory framework aims to regulate the crypto markets across EU member states. It focuses on maintaining financial stability and protecting investors in the region.
Czech Central Bank Considers Adopting Bitcoin as a Reserve Asset
The Czech Republic’s tax reform legislation is crucial, given the country’s strong interest in the emerging asset class. Last week, Czech National Bank (CNB) Governor Aleš Michl disclosed that the apex bank is considering allocating a portion of its reserve to Bitcoin (BTC).
According to him, the bank sees Bitcoin as a potential reserve asset because of its zero correlation with bonds. He added that the premier asset could enhance the appeal of a large portfolio.
Michl’s proposal got some pushback, with Czech Finance Minister Zbynek Stanjura expressing concern about Bitcoin’s high volatility issues. The Finance Minister noted that the country should not adopt Bitcoin as a reserve asset, given its high volatility.
Meanwhile, Michl also acknowledged Bitcoin’s volatility issues in his proposal. Yet, he emphasized that the bank’s board will carefully evaluate whether to adopt BTC as a reserve asset.
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