This week, Italy announced plans to reduce capital gains taxes on cryptocurrency in the upcoming 2025 budget, which will be finalized later this month, according to Reuters .

A previous proposal looked at increasing the capital gains tax on crypto from 26% to 42%.

"The tax increase will be significantly reduced during the parliamentary work," parliamentarian Giulio Centemero and Treasury Junior Minister Federico Freni told Reuters . "[There will be] no more prejudices about cryptocurrencies," they added.

Maurizio Leo, the country's Deputy Finance Minister, also highlighted the growing allure of crypto in the country as a reason not to pursue the increase. "The [crypto] phenomenon is spreading," he said.

The Reuters report added that the Italian government may choose to retain the current 26% rate, though that remains to be seen.

In December, the price of the world’s leading cryptocurrency soared above $100,000. This surge is reportedly a major reason why the Italian government is backpedaling on its tax hike, citing concerns that it might unintentionally fuel crypto’s rise in the country.

Italy ranks 37th in Chainalysis’ 2024 Global Adoption Index, with 11% of the population adopting digital assets. The majority of crypto users in Europe, including Italy, are millennials and Gen Z, according to a recent Bitpanda-commissioned YouGov survey .

“Cryptocurrencies are becoming increasingly popular in Europe, especially among millennials and Generation Z," said Eric Demuth, CEO of Bitpanda. "These young people continue to drive the adoption of cryptocurrencies.”

“The future of finance is in the hands of the younger generation,” Demuth added.

Italy remains one of the markets participating in Europe's landmark new Markets in Crypto Assets (MiCA) regulation, which will govern more than €1 trillion of crypto assets on the continent.