France’s goal of being the top cryptocurrency hub in Europe has been thrown into turmoil, after the National Assembly narrowly passed a new and controversial tax policy. The proposal, which classifies cryptocurrency as “unproductive wealth” like luxury yachts, collector cars, and gold, drew sharp criticism from industry leaders, who referred to the proposal as “economically unfair,” and noted the “short-sighted consequences of punishing innovation” involved in the change. The new legislation represents a radical and possibly damaging shift in policy. Instead of taxing profits when an asset is sold, it would impose an annual tax on the total value of the holdings, a change experts warn will drive talent and capital out of the country.
A Drastic Shift in Tax Policy
Amendment No. I-3379 to the 2026 Finance Bill, which was proposed by centrist MP Jean-Paul Mattei, has passed by a narrow margin of 163-150. It would impose a much broader “unproductive wealth” tax in place of France’s existing real estate wealth tax if it is enacted into law.
This new measure imposes a flat 1% annual tax on an individual’s net wealth once it exceeds €2 million ($2.2 million).
This is a fundamental change from France’s current system, which is broadly seen as competitive. At present, investors are typically subject to a 30% flat tax only on their capital gains, and only when they sell their crypto for fiat currency. The new proposal would tax crypto holdings annually, “whether or not they’re sold,” forcing investors to pay taxes on unrealized gains.
‘Penalizing Productive Capital’
The core of the backlash lies in the bill’s complete lack of nuance. Critics are furious that the amendment makes no distinction between a passive investor holding Bitcoin like digital gold and an entrepreneur or developer whose token holdings are their compensation for building a new project.
“The bill risks oversimplifying the crypto landscape,” Joe David, CEO of digital asset firm Nephos, told Decrypt. He argued that for many founders and ecosystem builders, their tokens represent “years of contribution, innovation, and risk taking,” not idle wealth. By lumping them together, David warned, the measure could “inadvertently penalize productive capital” that is actively fueling technological progress.
‘Inaccurate and Shortsighted’
The very label “unproductive wealth” has drawn scorn from tax experts and entrepreneurs. Éric Larchevêque, the co-founder of France’s own crypto hardware giant, Ledger, stated that the bill sends a clear and negative message: “Crypto is being equated with an unproductive reserve, not something that serves the real economy.”
Austin Yuanlun Yin, President of the Global Council on Crypto Taxation, echoed that sentiment. “By lumping digital assets like Bitcoin with yachts and art… France is sending a message that capital held in crypto is idle rather than dynamic. That is inaccurate and shortsighted,” Yin said. He argued that policymakers should instead “recognize their role in funding startups, decentralized infrastructure, and digital innovation.”
‘Economically Unjust’ for Founders
Beyond the philosophical complaint, the bill creates a legal and financial nightmare for crypto-native businesses. Burçak Ünsal, a managing partner at ÜNSAL Attorneys at Law, called the proposal “economically unjust,” particularly for founders and token issuers.
He pointed out that these individuals often hold assets as part of their operational role, which may be locked or vested. Taxing them on these holdings creates an “unintended disincentive” for anyone to build a long-term project in France. Ünsal also highlighted a “tax-structuring risk” for businesses, as the bill fails to clearly define the difference between a professional and an occasional trader, leaving that critical distinction to be decided on a “case-by-case basis.”
The Inevitable ‘Capital Flight’
With a final decision on the bill required by December 31, 2025, the stakes for France’s digital economy could not be higher. The bill now heads to the Senate, but the warning from the industry is unanimous.
Unlike a yacht or a classic car, digital assets are famously mobile. Experts warn the most predictable outcome of the bill will be a mass exodus. “Taxing crypto heavily ‘will accelerate capital flight’,” said Yin, noting that investors can move their digital assets across borders in minutes. After years of positioning itself as a leader in crypto, France may have just voted to become a flyover country for the next wave of innovation.
