France just sent a jolt through crypto wealth planning: lawmakers advanced a proposal to classify digital assets as “unproductive wealth” and apply a new 1% annual tax on holdings above €2 million. While it’s not law yet, a narrow National Assembly vote signals growing political momentum that could force high-net-worth holders to rethink custody, liquidity, and timing—potentially adding year-end selling pressure and repricing risk for BTC, ETH, and major alts held by French tax residents.

What’s happening

France’s amendment expands the tax base from real estate to include digital assets, “precious objects,” planes, and non-productive property. The levy would hit only “unproductive wealth” above €2,000,000 at a flat 1%, a shift from the current real estate wealth tax that’s progressive (0% below €800k, up to 1.5% above €10m). The measure passed the National Assembly (163–150) and now heads to the Senate as part of the 2026 budget, with possible implementation as early as January 1, 2026 if adopted.

Why it matters to traders

- Liquidity stress risk: HNW French holders may raise fiat annually to meet the tax, creating predictable sell windows around the reference date—watch for pressure on EUR pairs and major spot books. - Narrative overhang: Labeling crypto “unproductive” could depress local sentiment and push some capital offshore or into “productive” wrappers, altering onshore order flow and OTC activity. - Basis and spreads: If French desks de-risk, expect wider spreads on BTC/EUR and basis shifts on EUR-settled futures around tax deadlines and legislative milestones. - Spillover risk: France is a key EU economy; other regulators may explore similar frameworks, raising the policy risk premium across the bloc.

Key timeline and uncertainties

The proposal must clear the Senate and final budget reconciliation. Thresholds, valuation rules, and the tax base could change. A political push to lower the €2m threshold would amplify impact; tightening definitions of “unproductive” could pull more wallets and instruments into scope.

Actionable steps if you’re exposed

• Confirm residency: Determine whether you are a French tax resident; exposure hinges on residency, not just exchange location.
• Inventory and valuation: Consolidate all wallets and exchange accounts; prepare verifiable statements and a defensible valuation method for the reference date.
• Plan liquidity: Pre-fund tax obligations via staged conversions to EUR or stablecoins; avoid forced selling into thin holiday or quarter-end books.
• Structure legally: Explore compliant vehicles (e.g., regulated funds or corporate structures) with a qualified advisor; do not rely on informal offshore workarounds.
• Hedge tactically: If concentrated, consider protective puts or collars ahead of likely sell windows; monitor option skew for early stress signals.
• Watch the calendar: Track Senate sessions, committee edits, and the budget vote; set alerts for effective-date confirmation.
• Operational hygiene: Maintain custody segregation and clear audit trails to reduce administrative friction and valuation disputes.

Market setups to monitor

- BTC/EUR and ETH/EUR dislocations: Discounts vs. USD pairs around legislative headlines or year-end. - OTC prints and on-chain flows: Rising outflows from French exchanges or EUR stablecoin ramps can flag upcoming sell supply. - Depth and slippage: Reduced EUR orderbook depth during European trading hours could magnify intraday moves. - Sentiment signals: Public pushback from industry leaders suggests a narrative battle—short-term volatility tends to rise on policy shocks.

Bottom line

This is not law yet, but France is telegraphing a clear policy tilt that adds a recurring cost of carry to large onshore crypto balances. Traders should prepare for timed selling pressure, EUR market dislocations, and broader EU policy read-through. Build your liquidity plan, hedge high-beta exposure into key dates, and stay agile as the text evolves.

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