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Cryptocurrency News Articles
France Takes a Tiny Step Toward Bitcoinization with Crypto-Backed Lombard Loans
May 12, 2025 at 01:05 pm
In this monetary control tower, the Hexagon does not want to play the lone wolf.
France is Europe. And Europe is the temple of regulation. In this monetary control tower, the Hexagon does not want to play the lone wolf. No question of embracing bitcoin before the 27. Yet, sometimes, it winks at the most daring. Latest twist? A legal clarification on Lombard credit backed by cryptos. Not a revolution. But a step, even if disguised, is still a step.
Crypto as collateral: yes, but with a cautionary vest
The crypto Lombard credit was not born yesterday. It was already discussed in hushed banking circles. This loan, guaranteed by a crypto wallet, offers a promise: liquidity without liquidation. You lock your cryptos. You receive euros. In case of default, the collateral goes to the scrapyard.
But where France is finally moving is on the legal framework. The DDADUE 5 law, in force since April 30, allows “the establishment of a pledge by signed declaration of the owner of the cryptos“. One more formality. And one less ambiguity.
This change fits the MiCA logic, the great European crypto market charter. “The crypto Lombard credit is a great tool for structured HODLers,” comments Arnaud Touati. But beware: perhaps we structure, but we do not democratize yet.
Dan Arroche tempers:
« No revolution, just a legal clarification. »
And still, this is only on paper. The ground remains minefielded. French banks remain skeptical. The risk is too volatile. Solvency ratios too fragile. In short, real use remains marginal.
MiCA, taxation: the shackles of progress
A regulatory advance does not always rhyme with practical progress. Because in detail, the French tax system is a true labyrinth. And in this labyrinth, crypto Lombard credit might well fall into a trap.
Dan Arroche warns:
« The question is whether placing cryptos as collateral = transfer of ownership = taxable event? »
In other words, using your bitcoins as a pledge could activate… taxation. And there, no one is joking anymore.
Two cases must be distinguished:
* Crypto sold to repay the loan: this generates a capital gain or loss, to be declared in the year of the sale.
* Crypto kept in the wallet despite default: remains in the patrimony, no taxable event in the year of the loan, but capital gain or loss to be declared in the year of sale or donation.
In other words, a tax lawyer becomes mandatory. To avoid innovation turning into an administrative disaster.
Here are the key data to remember :
* DDADUE 5 law in force since April 30, 2024
* Article 93 of the General Tax Code defines the taxable events
* Capital gain or loss on the sale of crypto to repay the loan
* Undetectable transfer of ownership if the crypto remains in the wallet despite default
* No specific provision for crypto in the tax code, requiring interpretation by the administration
This new legal framework might encourage banks to offer crypto Lombard loans, a product already proposed by some European institutions. However, it remains to be seen whether French banks will be interested in this type of product, given their risk aversion and the potential difficulties in integrating it into their existing systems and reporting requirements.
A psychological factor is added to this legal equation: fear of banks. Their cautiousness slows adoption. “Obtaining crypto Lombard credit on acceptable terms is almost impossible,” concludes Arroche.
We pretend to legalize, but no one is playing along.
Between patrimonial tool and golden mirage
For whom is this new credit? For the average saver? No. For private banking clients, maybe. For large crypto portfolios, surely. This loan remains a wealth optimization tool, not a gateway to regulated DeFi.
In fact, very few players are ready. Few institutions accept this type of pledge. The crypto market is still deemed too unstable. Yet, some see an opportunity here.
This credit can become an alternative to asset sales, maintaining exposure to the market. So it appeals to those who want to “hodl while buying a house“. But provided they are well advised, and well capitalized.
And while some move forward, others denounce. On X, a user mocks:
« Historically all war loans were scams. Luxembourg life insurance, crypto in self-custody, the threat is serious. »An amusing take on the crypto narrative! 😉
"The year is 2024. War broke out in Ukraine. Faced with this crisis, the French State launched a large-scale bond issue, named "Imperium," to mobilize the nation's savings and support the war effort.
People were encouraged to subscribe to these bonds, presented as a patriotic duty and a way to participate in the collective destiny.
The bonds promised a low interest rate of 1%, but they were also subject to an original clause: in case
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