The French Senate has further advanced such techniques by proposing a new tax on “idle money,” and bitcoin, among others, has been on the receiving end. It brings digital assets under the scanner, together with yachts, private jets, and luxurious cars into focus. Such a proposal has received rather broad criticism over its potential positive effects on the cryptocurrency market and influence on investments. Bitcoin’s price is trading at $96,141.78.
An asset tax is referred to as “Unproductive Wealth”
The tax is intended to focus on non-income-yielding and non-pool deployable marketable securities within a reasonable period. The Senate’s plan places Bitcoin – and analogous cryptocurrencies – into the same category as commodities traditionally known as stores of value like luxury goods.
Congress officials say these types of assets, often used to save money, should pay more taxes. The proposal comes against how non-business-related assets should contribute to state revenues, especially for the affluent.
Effects on Bitcoin Investment
Regarding the proposal mentioned, investors voiced concerns that the change may make the Bitcoin holding less appealing. If so, the owners of popular digital assets among French citizens may face a greater cost, which is unlikely to contribute to the long-term investment. Concurrently, Bitcoin has been a major investment since unveiling the Bitcoin strategic reserve in the US.
According to experts, introducing tax talk in Bitcoin is counterproductive because investors will shy away from an asset they will have to pay extra taxes on. It could even temporarily lower liquidities and Bitcoin prices, but the moves will depend on several market forces.
Unrealized gains and change of regulation accounting
The new law taxes unrealized Bitcoin capital gains on those who reported total gross assets of €800,000 and above. This proposal is a fundamental change in the form of previous laws that levied taxes only when one converted gains into fiat money.
Annually, tax authorities will evaluate the worth of digital assets and tax them regardless of whether the holder sells them. This is a significant departure from how France previously operated regarding cryptocurrency taxation because the move presents many new compliance issues.
The Direction Générale des Finances Publiques will handle the functional Mechanical law, and its enforcement is expected to start in 2025. However, new EU directive laws that enable tax authorities to trace crypto holdings have made this change a little easier for France.
Broader implication for the entire crypto market
This change in the regulatory framework has elicited discourse in France and other parts of the world, and other pundits foresee possible domino effects thrashing Europe. Those who kept cryptocurrency with an average value of €800,000 are urged to revise their courses of action before the tax period.
The action taken by France also raises questions about whether other countries will begin to introduce similar frameworks. Whether this will result in future regulatory changes to make the circle even stricter across the EU or if intrepid investors are transferring activities to crypto-friendly regions remains to be seen.
