France implements a new wealth tax that targets cryptocurrency gains

Recently, the French Senate authorized the 2025 budget, which contains a new “unproductive wealth” tax.

The unrealized gains of a variety of crypto assets would be subject to this proposed tax on an annual basis. In other words, investors may be subject to taxation on the appreciation of their cryptocurrency assets, regardless of whether they have sold any of them.

The concept of taxing unrealized gains has incited extensive discussions. Advocates contend that it is a justifiable method of taxing rich investors who possess substantial, dormant fortunes. However, critics contend that it unjustly penalizes those who are merely maintaining their investments, referring to it as a treacherous slope.

In France’s National Assembly, legislators will determine whether or not to approve this tax through a vote. Passage of this legislation could establish a precedent in Europe, where governments are increasingly emphasizing the enforcement of crypto regulations.

France is not a newcomer to charging taxes on cryptocurrency. Crypto trade profits are already subject to capital gains taxes. However, this new tax takes it a step further by focusing on unrealized gains, a practice that has not been extensively in other countries. Even during market downturns, it could result in a more substantial tax burden for crypto investors.

This initiative coincides with broader discussions regarding the regulation of digital assets in the European Union. Governments are exploring methods to prevent the benefits of crypto from negating the loss of tax revenue as it continues to gain prominence. However, taxing unrealized gains is a daring measure that could potentially put the patience of crypto enthusiasts to the test.

The proposal underscores the increasing conflict between governments and the decentralized financial systems pioneered by cryptocurrencies. Although legislators are striving to integrate cryptocurrency into conventional finance, some contend that these initiatives could potentially impede innovation and divert investment to alternative sectors.

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