France’s crypto paradox: tax “unproductive” holdings, hoard 420K BTC

Introduction

France is weighing two contradictory crypto policies that signal a split vision in Paris: treating digital assets as taxable “unproductive” wealth while pursuing a strategic national Bitcoin reserve. A first-reading amendment in the French National Assembly rebrands the real-estate-focused wealth tax into a broader tax on “unproductive wealth,” explicitly including digital assets. Under the proposal, a 1% levy would apply to net taxable wealth above €2 million, capturing cryptocurrencies alongside collectibles and luxury assets—raising concerns about taxing unrealized gains and imposing annual mark-to-market burdens on crypto holders. Industry voices warn the move could push trading and asset management activity to more favorable jurisdictions.

In parallel, the right-leaning Union des droites pour la République (UDR) introduced a bill to establish a national Bitcoin reserve targeting 420,000 BTC—roughly 2% of total supply—over seven to eight years, framing Bitcoin as “digital gold” and a pillar of monetary sovereignty. The blueprint envisions funding via state-backed mining using surplus electricity, transferring confiscated coins, reallocating dormant public deposits, and even allowing certain taxes to be paid in BTC, plus a small exemption for euro-stablecoin payments. While the bill faces long odds in a fragmented parliament, it aligns with a broader “EU Bitcoin race” narrative and positions France to integrate Bitcoin into fiscal and energy policy if adopted.

Legally, both measures could coexist—private wallets taxed as “unproductive” capital while state BTC holdings remain exempt—yet they create a policy paradox with market feedback loops. A wealth tax on crypto could shrink domestic private supply and raise the state’s acquisition costs; aggressive sovereign accumulation could tighten liquidity and inflate taxable bases for residents. The wealth-tax amendment now heads to the Senate for refinements (including definitions and potential carve-outs), while the Bitcoin reserve bill awaits committee debate. Regardless of their fate, France’s crypto policy debate is reframing digital assets as both taxable luxury and strategic reserves, with implications for crypto regulation, adoption, and sovereignty across the EU.

Background

France is advancing two headline-grabbing crypto policies that seem to pull in opposite directions: a new wealth tax that explicitly includes digital assets, and a bill to build a strategic national Bitcoin reserve of roughly 420,000 BTC (about 2% of total supply). Together, these moves frame digital assets as both taxable luxury and monetary infrastructure—an unusual juxtaposition that could shape crypto regulation, adoption, and capital flows across the EU.

On Oct. 31, the National Assembly approved at first reading an amendment that transforms the existing real-estate-focused wealth tax (IFI) into a broader “tax on unproductive wealth,” capturing categories like collectible cars, fine art—and “actifs numériques” (digital assets) including cryptocurrencies. The proposal applies a flat 1% levy to net taxable wealth above €2 million, moving crypto into the same bucket as other assets considered idle from a public-policy standpoint. The measure still requires Senate approval as part of the 2026 budget process and could be revised before enactment. Coverage from major outlets describes a narrow vote and an unconventional coalition backing the change, emphasizing both the limited rate and broader base expansion beyond real estate. See reporting and summaries in Le Monde and industry roundups at Analytics Insight and FinancialContent. In parallel, the center-right Union des droites pour la République (UDR) tabled a bill to establish a state Bitcoin reserve targeting 420,000 BTC over seven to eight years, arguing Bitcoin is “digital gold” that enhances monetary sovereignty.

What the wealth tax means in plain terms

• What’s changing: France would rebase its wealth tax away from real estate-only to a broader “unproductive wealth” base that explicitly names digital assets. A flat 1% rate would apply to net wealth above €2 million. According to reporting, backers argue the goal is to redirect capital toward “productive” activity (e.g., rented housing that meets environmental criteria) and away from assets seen as idle stores of value.

• Unrealized vs. realized: While this is not an income tax on realized gains, wealth taxes are assessed annually on asset values (often via “mark-to-market” valuation), which means high-net-worth households could owe tax on their crypto holdings each year even if they don’t sell.

• Reporting and valuation: Wealth taxes typically require annual disclosure and valuation of covered assets. Details—like exact valuation methodologies for “actifs numériques”—could be refined in the Senate phase. Industry commentary notes concerns about liquidity planning if taxpayers must sell assets to meet annual liabilities.

The Bitcoin reserve bill—ambition and mechanics

• Target and timeline: The UDR proposal seeks approximately 420,000 BTC (about 2% of Bitcoin’s fixed 21 million supply) accumulated over 7–8 years, positioning Bitcoin as a sovereign reserve asset.

• Funding ideas cited in reporting: leveraging state-backed mining with surplus electricity, transferring confiscated crypto from judicial processes, and exploring reallocation of dormant public deposits. Some proposals also envision allowing certain taxes to be paid in Bitcoin and offering limited daily exemptions for euro-stablecoin payments. 

• Political odds: In a fragmented parliament, passage is uncertain, but the bill signals a growing European debate about sovereign Bitcoin reserves and the role of “digital gold” in national balance sheets.

How these policies can coexist—and conflict—in practice

Legally, there is no contradiction: the wealth tax targets private balance sheets; the reserve bill would govern public holdings. Practically, the two tracks interact through market dynamics:

• Private supply vs. state demand: An annual wealth tax on crypto can raise the cost of holding for residents, potentially shrinking local private supply. If the state simultaneously becomes a large buyer, acquisition could become costlier due to tighter liquidity and higher prices.

• Valuation feedback loop: Aggressive state accumulation could support higher market valuations, which in turn increases the taxable base for private investors subject to mark-to-market wealth assessments.

• Capital mobility: France’s crypto-industry leaders warn the new base could push trading desks, asset managers, and founders to more lenient jurisdictions—a risk repeatedly seen when tax and regulatory costs rise faster than in peer markets. 

Global context: how other countries tax crypto wealth

France would not be alone in taxing crypto as part of annual net wealth:

• Switzerland: Crypto is treated as an asset and typically falls under cantonal wealth taxes, commonly in the 0.3%–1% range, with year-end valuation rules guided by the Federal Tax Administration. 

• Spain: Crypto can be subject to Wealth Tax depending on the autonomous community, with regional thresholds and rates. 

These examples underscore that an annual net-wealth approach to digital assets is already in use in parts of Europe—not as income tax on realized gains, but as a yearly assessment on the value of the balance sheet.

Key terms explained

• Unrealized gains and mark-to-market: An unrealized gain is the increase in an asset’s value you haven’t locked in by selling. “Mark-to-market” means valuing assets at current market prices for a particular date (often year-end) to calculate taxes or financial statements.

• Wealth tax vs. capital gains tax: Wealth taxes assess a portion of your net assets each year, regardless of sales. Capital gains taxes apply when you dispose of an asset and realize a profit.

• Bitcoin reserve and “digital gold”: A sovereign Bitcoin reserve treats BTC like a strategic reserve asset—similar in spirit to gold—used to diversify national reserves, hedge currency risk, or signal monetary independence.

What to watch next in France

• Senate refinements: Lawmakers may clarify the definition of “actifs numériques,” valuation methods, carve-outs for demonstrably “productive” crypto use (e.g., capital deployed in regulated funds), or administrative relief for complex holdings.

• Reserve bill committee path: Even if passage is a long shot, hearings could surface practical implementation questions—procurement frameworks, custody standards, mining economics, and transparency obligations.

• EU coordination: France’s moves will be read against the broader EU regulatory and supervisory framework. While MiCA standardizes licensing and conduct for crypto service providers, taxation remains primarily national—creating potential competitive differences among member states.

Practical takeaways for investors and builders

• Plan for valuation and liquidity: If enacted, high-net-worth residents with crypto exposure may need robust recordkeeping, independent valuations, and liquidity planning to handle annual assessments.

• Consider entity and jurisdiction choices: Firms may weigh the tradeoffs of locating trading and treasury operations in jurisdictions with clearer or lighter wealth-tax treatment of digital assets.

• Monitor custody and reporting standards: Sovereign accumulation proposals often raise the bar for secure custody, auditability, and data reporting; expect spillovers into best practices for institutional market infrastructure.