The Deputy Prime Minister of Italy has proposed a new tax on cash and other valuables stored in bank safes by the country’s citizens. If made into a law, the measure could mark a move towards Bitcoin and other cryptocurrencies as a way to keep the government out of citizens’ safe boxes.
This proposal came amidst rising geopolitical tensions that are impacting investment markets and making value held in cash and other valuables a more attractive option for many. A similar move has already been made by Chile and Azerbaijan where operations with cryptocurrencies are subject to taxation.
Now, the Italian Government is taking financial regulatory measures one step further by going after private savings. A tax specifically designed to tax tangibles stored in a safe may further highlight the advantages of Bitcoin as a method of storing value.
According to a report published earlier published by Reuters, Italy’s government is considering taxing its citizens’ private savings held in safety deposit boxes at banks.
The report goes on to state that the nation’s Deputy Prime Minister, Matteo Salvini, made the proposal on a late night TV program last week. It was picked up by the domestic press immediately afterwards.
Salvini reportedly stated that he had been informed that there were hundreds of billions of euros stored as cash and other assets in safety deposit boxes around the country.
He described the savings of his citizens as being “substantially hidden” money, implying that the government has some ordained right to know what the Italian people as individuals have managed to save.
He went on to state that citizens that were open about their holdings would be taxed at a lower rate than those who were less forthcoming with information about their savings.
Such a measure from the Italian government would be a precedent. But what is more alarming is that it may be the first of a number of measures of further restrict the privacy of European citizens when it comes to storing and moving their financial assets. At the same time, this may further drive cryptocurrrency adoption as citizens turn to other means of storing value to protect their savings. Such a policy could be favourable to Bitcoin, in particular, contributing to the bullish market.
News of the proposed new taxation scheme come as Italian retail deposits hit a new all-time high. At the same time, geopolitical tensions continue to rock European markets. The Financial Times published a report on the five month volatility peak of the share prices of the Eurozone’s largest companies. Tensions in Europe stemming from Brexit and geopolitical worries overseas caused by the ongoing US/China trade war and fear of the pending collapse of a nuclear accord with Iran are driving the current instability.
All of this points to a strong possibility for Italian investors turning to a safer, more anonymous way to store their assets without the government snooping. However, given the perpetual volatility of Bitcoin, it remains unlikely that the crypto asset market will see any serious influx of capital in the form of life savings of Italians being converted into crypto.
One of the main benefits of Bitcoin is its decentralized nature, which makes it harder for governments to come after than funds held in safety deposit boxes. While it remains one of the most volatile currencies on the market, its substantial growth in the past years can potentially justify a move away from the current heavily regulated and taxed fiat system that seems to be edging ever closer to meltdown.