French MPs advance measure to tax crypto as ‘unproductive wealth’
News Summary
France's National Assembly has passed an amendment to tax crypto holdings exceeding 2 million euros (approximately $2.3 million) as “unproductive wealth.” The measure, introduced by centrist MP Jean-Paul Matteï and supported by socialist and far-right MPs, passed with a vote of 163-150. The proposed amendment expands the scope of taxable assets to include “non-productive” real estate, precious objects, and digital assets, imposing a flat 1% tax rate on holdings above the €2 million threshold. This contrasts with the current progressive wealth tax, which starts at €800,000 and can reach 1.5% for assets over €10 million. Éric Larchevêque, co-founder of crypto wallet maker Ledger, criticized the move, stating it punishes savers protecting their future with Bitcoin and gold, and sends a political message equating crypto with unproductive reserves. He warned that French crypto holders might be forced to sell assets to pay the tax and expressed concern about future lowering of the threshold. The measure still requires Senate approval to become law for the 2026 budget, but its implementation by January 1, 2026, is considered highly probable.
Background
France has a history of wealth taxation, originally an 'Impôt de Solidarité sur la Fortune' (Solidarity Tax on Wealth), which was reformed in 2018 into the current 'Impôt sur la Fortune Immobilière' (Real Estate Wealth Tax or IFI), focusing solely on real estate. Previous iterations of the wealth tax were controversial for allegedly prompting wealthy individuals to leave France. Currently, France's IFI applies to households with net assets exceeding €1.3 million but exempts many assets considered 'unproductive,' such as gold, artworks, classic cars, and yachts. The proposed amendment aims to correct this 'economically inconsistent' approach by broadening the tax base to include more assets, including digital assets, to encourage 'productive investment.'
In-Depth AI Insights
Are there deeper national economic strategies behind this tax amendment? France's move appears to be more than just a revenue-generating measure; it's likely a macro-economic strategy designed to steer capital towards nationally prioritized sectors and to address the challenges posed by the rise of global digital assets. By classifying cryptocurrencies and other digital assets as 'unproductive wealth,' the French government may be signaling a clear preference for capital investment in the real economy and traditional industries, such as innovative technologies, infrastructure, or SMEs, rather than pure store-of-value or speculative digital assets. This move both defends traditional economic models and could be a microcosm of Europe's increasing regulation of the digital economy, especially as the European Central Bank advances the digital euro and MICA regulations, with governments seeking greater control over digital assets. How might this measure impact the cryptocurrency ecosystem in France and Europe? This new tax could have significant negative repercussions for the French cryptocurrency market, particularly concerning market sentiment and investor behavior. - Capital Flight Risk: High-net-worth crypto holders may opt to transfer their assets to more crypto-friendly jurisdictions, potentially leading to capital outflows from the French crypto industry. - Innovation Deterrence: Classifying crypto as 'unproductive' could stifle the development of indigenous French crypto technology and blockchain innovation, sending an unwelcoming policy signal that might prompt startups and talent to relocate. - European Regulatory Ripple Effect: Given France's influence within the EU, this move could set a precedent for other European nations, encouraging more countries to adopt similar wealth taxes or stricter regulations on digital assets, potentially creating a less favorable regulatory environment for crypto across Europe. What unintended consequences might this policy have on traditional financial markets and asset allocation strategies? Including cryptocurrencies in wealth tax definitions and lumping them with traditional 'unproductive' assets like gold and art could reinforce a certain negative perception among traditional investors that crypto assets are speculative rather than truly productive investments. This could lead to: - Asset Re-allocation: A segment of investors seeking safe-haven and wealth preservation might reconsider their crypto allocations, favoring traditional safe-haven assets or choosing to invest in government-encouraged 'productive' sectors to avoid taxation. - Financial Product Innovation: The market might see an emergence of more financial products and services designed to circumvent or optimize for the new tax law. For example, through structured products or funds to diversify holdings below individual high-net-worth thresholds, or by exploring ways to link crypto assets with productive investments. - Debate on Digital Asset Classification: This policy could also ignite a broader global debate on the fundamental nature of digital assets – whether they are currencies, commodities, securities, or merely 'unproductive wealth' – which would have profound implications for regulatory frameworks and tax policies worldwide.