The French Senate recently approved the 2025 budget, which includes a new tax on so-called 'unproductive wealth'. This tax targets various crypto assets and applies annually to unrealized gains, meaning investors could be taxed on the increased value of their crypto holdings—even if no coins have been sold.
Introduction of Tax on Unrealized Gains
The idea of taxing unrealized gains has sparked broad discussions. Supporters argue it's a fair way to tax wealthy individuals sitting on large, untapped fortunes. Critics call it a slippery slope, claiming it unfairly penalizes those merely holding onto their investments.
Arguments For and Against
France isn't new to taxing cryptocurrency. Profits from crypto trades are already subject to capital gains taxes. But this new tax goes further by targeting unrealized gains—something not widely adopted in other countries. For crypto investors, it could mean a heavier tax burden even during market downturns.
Impact on the Crypto Market
The proposal comes amid broader discussions about digital asset regulation within the European Union. As crypto grows in popularity, governments seek ways to ensure benefits don't come at the cost of lost tax revenue. Still, taxing unrealized gains is a bold move that could test the patience of crypto enthusiasts.
If passed, this tax could set a precedent in Europe, where governments are increasingly focused on tightening crypto regulations. While lawmakers aim to bring crypto into traditional financial systems, some argue that such measures could stifle innovation and drive investments elsewhere.
