Germany’s draft crypto-tax reform has drawn a pointed warning from Circle’s (NYSE:CRCL) Patrick Hansen, who says one overlooked clause could overtax ordinary retail holders who cannot reconstruct clean purchase records.
Hansen, Circle’s senior director for EU strategy and policy, focused on a planned 50 percent substitute assessment.
If a platform does not know a user’s acquisition costs and the taxpayer cannot prove them in a clean and credible way, authorities would assume the coins were bought after December 31, 2026, and levy tax on half the sale proceeds rather than on actual gain.
Hansen said that formula effectively treats prices as if they had doubled between purchase and sale.
The wider package would move newly acquired “exchange crypto assets” such as Bitcoin and Ether out of Germany’s current private-sale rules, which still allow tax-free gains after a one-year holding period, and into the capital-income regime.
Gains on coins bought after the cutoff would face a flat 25 percent tax plus the solidarity surcharge, an effective 26.375 percent, no matter how long they were held.
Platforms would start withholding later, around 2028.
Holdings acquired before the cutoff would generally stay under today’s system.
The 50 percent fallback is meant as a collection default when cost basis and purchase dates cannot be established for withholding.
Kryptobesteuerungspläne in Deutschland 🇩🇪 was bisher kaum diskutiert wird
Über die geplante Reform der Kryptobesteuerung in Deutschland wurde hier und in der Community schon viel diskutiert. Ein Punkt kommt mir dabei bisher viel zu kurz und sollte in meinen Augen dringend… pic.twitter.com/eekdmyCyRX
— Patrick Hansen (@paddi_hansen) September 25, 2026
Hansen cited the early Finance Ministry draft, specifically a proposed new § 43a (2).
His concern is who that default would hit.
He argued it would fall hardest on everyday consumers and investors: people who may not even notice the rule change, cannot technically document acquisition costs in a tidy way, and in recent years sometimes bought with little profit or at a loss.
Those users could then pay far more tax than their real economic result justifies—even, in the worst case, after selling at a loss.
Hansen said he is no tax specialist, but the implicit doubling assumption looks too high.
Bitcoin, he noted, trades below its level of a year earlier and well below peaks of the past two years; most other crypto assets have done worse still.
Without an adjustment, he fears the “average person” will overpay whenever records are incomplete.
Follow-up comments from Hansen underscored the same point.
He said he opposes the new treatment overall, but if the reform proceeds—which he considers likely—the 50 percent figure should at least be cut substantially.
He also noted that it remains unclear what documentation would count as “sufficient,” creating another practical problem for users.
Tax lawyers have separately observed that the 50 percent base is a provisional withholding tool, not a final profit fiction, and can later be corrected in assessment.
Even so, it creates a cash squeeze when coins move from self-custody or foreign platforms onto a German exchange.
The draft is still at an early ministerial stage, before a cabinet decision.
Hansen said he hopes it does not pass in this form. His intervention has pushed a technical withholding rule into the center of the public debate: whether incomplete paperwork should trigger a blunt assumption of large, undocumented gains.