In June, Brazil eliminated its exemption for small cryptocurrency gains and introduced a flat 17.5% tax on capital gains from digital assets, no matter the size of the gain. That move — framed as part of a wider effort to raise revenue from financial markets — has reverberated beyond Brazil’s borders and prompted fresh debate about how governments will treat crypto going forward.

What looked like a local tax adjustment is now being seen as part of a broader pattern: policymakers worldwide are reassessing crypto as an accessible source of government revenue. Countries that once offered favorable, lightly taxed regimes are increasingly under pressure to tighten rules or remove preferential treatment.

Recent examples underscore the shift. Portugal moved in 2023 to impose a 28% tax on crypto gains held for less than a year, signaling the end of its long-standing tax-free reputation for some crypto activity. At the same time, nations such as Germany still maintain relief for assets held over a year, and the United Kingdom continues to offer a capital gains allowance (recently reduced), showing that policy approaches remain varied even as the overall direction trends toward more taxation.

Retail investors are especially exposed by these changes. Flat rates and the removal of small‑gain exemptions tend to hit small traders and savers harder than large institutions, which can better absorb costs or move operations to friendlier jurisdictions. For individuals in inflation-prone or emerging economies who use crypto as a store of value, new taxes can significantly reduce the utility of those holdings.

Part of what makes crypto an attractive target for tax authorities is perception: it’s often framed as speculative and skewed toward wealthier investors, so new levies attract less public resistance than increases to more widely held taxes. But the consequences are real for startups, everyday users, and the broader market if more countries follow Brazil’s lead.

Ultimately, Brazil’s decision is likely a bellwether rather than an isolated event. The central question now is not whether more jurisdictions will tighten crypto taxation, but how quickly they will act and how far they will go in closing the low‑tax gaps that have helped fuel retail adoption.