Home Cryptocurrency Crypto Receives Some Bad News from Friendly Portugal

Crypto Receives Some Bad News from Friendly Portugal

The crypto industry is looking for good news much like the rest of the asset classes in these times of concern about the health of the economy.

For a long time, cryptocurrency evangelists have claimed that bitcoin (BTC), the largest digital currency, can be used to hedge against inflation, since you know exactly what the supply is.

But the current economic downturn has just erased that argument.

Indeed, soaring prices for goods and services have never been so high in 40 years but BTC fails to take advantage of it. Since January, BTC has lost 72.1% of its value compared to its all-time high of $69,044.77 set on Nov. 10, according to data firm CoinGecko.
BTC is currently trading around $19,250.

Overall the crypto market has lost over $2 trillion since its November highs.

Cryptocurrencies, which are the public face of the crypto industry that wants to disrupt the traditional financial services sector, are now increasingly considered risky assets in the same way as the shares of technology groups. Basically, when there are doubts about economic growth, investors liquidate those assets that are bets on the future.

The craze around non-fungible tokens (NFTs), another side of the crypto industry, has also died down. The metaverse, the third element of the crypto trifecta, still fails to convince skeptics.

This new situation has completely upset the sector in recent months. The liquidity crisis which has also affected crypto lenders, hedge funds and exchanges has also revealed that transparency is still far from a principle in crypto.

All these problems weigh heavily on the sector which has recently recorded serial bankruptcies – Celsius Network, Voyager Digital, Three Arrows Capital -.
Many firms have also laid off hundreds of employees and frozen hiring. Since then, we have also witnessed a change of guard with the departure of founders of firms such as Michael Saylor, who is no longer CEO of MicroStrategy  (MSTR) , or Jesse Powell who just handed over the reins at crypto exchange Kraken.

The hemorrhage of talents continues.

Brian Roberts, CFO of OpenSea, the Amazon of NFTs, has just announced that he has stepped down.

“Well it is time for me to come ashore from the ‘open seas’,” Roberts wrote in a post on LinkedIn on Oct. 7. “I remain incredibly bullish on web3 and especially OpenSea. The company is heads down building and I assure you, the best is yet to come.”

Roberts, a former CFO of Lyft  (LYFT) , didn’t even last a year in his job. He had been appointed in December 2021. He does not give the reasons for this departure.

In addition to talent departures, the industry is also in the crosshairs of regulators around the world.

The latest news is particularly bad.

Portugal, often seen as crypto-friendly, plans to start taxing gains from digital currencies purchased for less than a year.

Basically, the country will tax the earnings made by anyone holding digital currencies for less than a year. The tax rate is 28% according to a proposal that is part of the 2023 budget. It was unveiled on Oct. 10.

Crypto assets held for more than a year will remain tax-free.

Until now, the Portuguese government did not tax crypto gains unless they were made by professionals and companies.

You can read the draft of this proposal here. It’s in Portuguese.

The government also wants to create a 10% tax on crypto transfers and a 4% tax on commissions charged by brokers.

The proposals have yet to be approved, but it is a huge change that should thwart many industry players who were considering moving to the country for its pro-crypto politics. Indeed, in recent years, the country has welcomed crypto firms eager to take advantage of an absence of regulation.

In addition, the country, which wants to attract investors, offers a special program, known as the non-habitual resident (NHR) tax regime. The NHR provides a flat 20% tax on foreign residents’ income and full tax exemptions after 10 years of residence.