France's Proposed Crypto Tax is "Economically Unjust": Experts

Core Viewpoint - France's National Assembly has adopted a wealth tax amendment targeting cryptocurrency holdings, which may hinder innovation and drive talent abroad [1][4]. Group 1: Tax Amendment Details - Amendment No. I-3379 to France's 2026 Finance Bill was passed with a narrow vote of 163-150, adding digital assets to a new "unproductive wealth" tax base alongside gold, yachts, and classic cars [2]. - The amendment imposes a flat 1% annual tax on net wealth exceeding $2.2 million (€2 million), increasing from the previous threshold of $1.49 million (€1.3 million) [2]. Group 2: Implications for Cryptocurrency - The bill does not provide exemptions for cryptocurrency, unlike certain long-term rental properties, complicating tax treatment for crypto founders and builders [3]. - The lack of nuanced definitions in the amendment could lead to oversimplification of the crypto landscape, failing to differentiate between passive investors and ecosystem builders [4]. Group 3: Concerns from Industry Experts - Experts warn that the new tax structure could inadvertently penalize productive capital and technological progress in France's digital economy [4]. - The proposal replaces the previous 30% sale-only crypto tax with an annual wealth levy on holdings, taxing coins regardless of whether they are sold [5]. - There is a risk of economic injustice in taxing early token-holders who contribute to ecosystem-building, creating disincentives for long-term alignment [5]. Group 4: Tax Structuring Risks - The amendment lacks clear definitions distinguishing between occasional and professional traders, which could lead to tax-structuring risks for token-based business models [6][7]. - The determination of trader classification would be case-by-case, based on volume, frequency, and proportion of crypto income, leaving uncertainty until further guidance is provided [7].