French Crypto Tax: Alarming Move Labels Digital Assets as ‘Unproductive Wealth’

The landscape of cryptocurrency regulation continues to evolve globally, and France is now at the forefront of a significant, and potentially controversial, shift. French lawmakers recently advanced a measure to tax larger crypto holdings, classifying them as ‘unproductive wealth.’ This decision sends a clear signal about how a major European economy views digital assets, potentially impacting investors and the broader crypto ecosystem. For many in the crypto community, this move represents a concerning ideological stance against the burgeoning digital economy.

Understanding the New French Crypto Tax Initiative

Lawmakers in France’s National Assembly have taken a decisive step. They passed an amendment considering substantial crypto holdings as “unproductive wealth.” This new classification would subject these assets to taxation. Centrist MP Jean-Paul Matteï introduced the amendment on October 22. The National Assembly, France’s lower house, approved it with a vote of 163-150. This approval came late on a Friday, notably with support from socialist and far-right MPs. This cross-party backing highlights a broad political consensus on the issue. However, the measure still faces a full parliamentary process, including passage through the Senate, before it can become law as part of the 2026 budget.

The core argument behind this amendment stems from a perceived “economic inconsistency” in existing real estate wealth tax laws. Matteï’s summary of the amendment argued that current laws exclude “unproductive goods” from taxation. These include items like gold, rare coins, classic cars, yachts, and works of art. He claims the new tax will “encourage productive investment.” The current system, he asserted, fails to account for assets that could “contribute to the dynamism of the French economy.” Consequently, the amendment aims to broaden the tax base to include assets not traditionally considered drivers of economic growth.

Defining ‘Unproductive Wealth’ and Digital Asset Taxation

The amendment significantly expands the definition of taxable assets under French law. Previously, the real estate wealth tax (IFI) primarily focused on property. Now, “unproductive goods” will no longer be exempt. This expanded scope includes:

• Non-productive real estate: Property not actively used for economic activity.
• Precious objects: Items like jewelry, art, and collectibles.
• Luxury assets: Such as private planes and yachts.
• Digital assets: This explicitly includes cryptocurrencies and other digital holdings.

This reclassification is a critical development for the cryptocurrency market in France. It places digital assets in the same category as traditional luxury items, implying they do not directly contribute to the nation’s economic output in the same way as productive investments. The intention is to incentivize investment in sectors deemed more beneficial to the French economy.

The new tax framework introduces changes to both the threshold and the rate. Only individuals with “unproductive wealth” exceeding 2 million euros (approximately $2.3 million) will face this tax. This represents an increase from the current threshold of 1.3 million euros (approximately $1.5 million) under existing laws. Furthermore, the tax rate itself is undergoing a change. The amendment proposes a flat rate of 1% on taxable assets above the 2 million euro threshold. This contrasts with the current progressive real estate wealth tax, which ranges from no tax on assets below 800,000 euros (approximately $922,660) to 1.5% for assets exceeding 10 million euros (approximately $11.5 million). The shift to a flat rate simplifies the calculation but could lead to a higher effective tax for some.

Community Backlash: Concerns Over France Crypto Regulation

The inclusion of digital assets in this “unproductive wealth” category has naturally sparked considerable disappointment among local crypto enthusiasts. Éric Larchevêque, co-founder of the prominent crypto wallet maker Ledger, voiced strong objections. On Saturday, he stated that the amendment “punishes all savers who wish to financially anchor themselves to gold and Bitcoin in order to protect their future.” His comments reflect a widespread sentiment that the government misunderstands the role and potential of digital assets.

Larchevêque articulated the perceived political message: “Crypto is equated with an unproductive reserve, not useful to the real economy.” He called this a “major ideological error,” revealing a “fiscal shift” aimed at “punishing the holding of value outside the fiat monetary system.” This perspective highlights the fundamental disagreement between the government’s economic philosophy and the principles often championed by the crypto community. Many believe cryptocurrencies offer a hedge against inflation and a new form of value storage, rather than simply being unproductive assets.

A significant concern raised by Larchevêque involves the practical implications for French crypto holders. He suggested that individuals might be compelled to sell their digital assets to cover the tax if they lack other liquid funds. This could force premature liquidation, potentially disrupting investment strategies and market stability for individual investors. Furthermore, he expressed apprehension that the 2 million euro threshold could be lowered in the future, expanding the tax’s reach to more moderate crypto holders. Despite the ongoing legislative process, Larchevêque believes the probability of the measure taking effect on January 1, 2026, remains strong.

The Broader Implications of Digital Asset Taxation in Europe

France’s move to impose a specific crypto wealth tax is not an isolated incident but rather part of a broader trend of increasing scrutiny and regulation of digital assets across Europe. The European Union has been actively working on comprehensive regulatory frameworks, most notably the Markets in Crypto-Assets (MiCA) regulation. MiCA aims to provide a harmonized framework for crypto-asset issuance and service providers across all EU member states, focusing on consumer protection, market integrity, and financial stability. However, MiCA primarily addresses market operations and consumer safeguards, not wealth taxation directly.

The French initiative introduces a new dimension to this regulatory landscape. By labeling crypto as “unproductive wealth,” France is taking a distinct approach that could influence other member states. While some countries might view crypto primarily as a capital gains asset, France’s stance categorizes it alongside luxury goods, suggesting a more punitive or restrictive view. This could potentially set a precedent, encouraging other nations to explore similar taxation models for digital assets. Conversely, it might also lead to a brain drain, with crypto businesses and investors potentially seeking more favorable regulatory environments outside France.

The debate surrounding “unproductive wealth” also extends beyond digital assets. It touches on fundamental economic principles regarding what constitutes valuable investment. Proponents of the tax argue it encourages capital allocation to ventures that create jobs, foster innovation, and directly contribute to GDP growth. Critics, however, contend that this classification overlooks the potential of digital assets to:

• Drive technological innovation: Blockchain technology underpins cryptocurrencies and has applications far beyond financial transactions.
• Provide financial inclusion: For individuals in underserved regions, crypto can offer access to financial services.
• Act as a store of value: Similar to gold, many view Bitcoin and other cryptocurrencies as a hedge against inflation and economic instability.

This ideological clash between traditional economic views and the emerging digital economy is at the heart of the French decision. It reflects a cautious, perhaps even skeptical, approach to a rapidly evolving asset class.

Looking Ahead: What This Means for Crypto Investors and the Market

The French parliamentary process is far from over. The amendment must still navigate the Senate and be incorporated into the final 2026 budget law. This means there is still potential for modifications, debates, or even its rejection. However, the strong initial vote in the National Assembly suggests significant political will behind this measure. Crypto investors in France must monitor these developments closely, as the eventual outcome will directly impact their holdings and financial planning.

For the broader European and global crypto market, France’s decision serves as a bellwether. It indicates a growing trend among governments to seek new ways to tax digital assets, moving beyond simple capital gains. This could prompt other nations to re-evaluate their own tax policies concerning cryptocurrencies. Such regulatory shifts can create uncertainty, potentially affecting investment flows and market sentiment. The crypto industry, therefore, faces a critical period of engagement with policymakers to ensure a balanced and informed regulatory environment that fosters innovation while addressing legitimate governmental concerns.

Ultimately, the debate over taxing crypto as “unproductive wealth” highlights a fundamental challenge for regulators worldwide: how to integrate a novel, decentralized asset class into existing legal and financial frameworks. France’s approach, while controversial, offers a glimpse into one possible future for digital asset taxation. Its implications will resonate not only within France but across the global cryptocurrency landscape.