It seems like somehow, even though we know much more about cryptocurrencies today, and there is a lot of development in accepting these new currencies as part of the payment method, there are still certain concerns and unknown facts. Furthermore, fake news and bad reports from government officials were pretty confusing and contradictory in some situations, and all that led to global confusion.
Knowing this, it’s nothing strange that most people are still confused and unaware of all the benefits that come from digital money. Of course, even here, there are some disadvantages, but that’s mostly about cryptos not being widely approved.
Luckily, there is huge progress today, and central banks, financial institutions, and governments are now more willing to accept it, as they found a way and added certain laws that allow them to gain profits from all this by adding taxes. As we all know, almost everything today is about money and whether and who will gain the most profits, and that was the main problem for governments to accept cryptos as new currencies, and some of them even pushed such laws, were taxes for ownership of digital assets were much higher for the people than their profits.
Take French lawmakers as an example, as they made laws that were so bad for crypto owners taxation-wise, but it seems that there has been some progress lately and that they are considering changing these bad laws. Discussions among French lawmakers on Wednesday were focused on clarifying that nation’s taxation policies regarding Bitcoin and altcoins. These discussions come several months after a major change in regulations tightened the leash on more types of cryptocurrency firms.
Current Tax Levels Unconducive to Widespread Use of Cryptocurrencies
Both crypto-related business owners and crypto enthusiasts alike have long been calling for an overhaul of France’s current cryptocurrency tax scheme. Under current regulations, cryptocurrencies are treated as property rather than currency or income.
This has serious ramifications at every level of use. In France, even casual Bitcoin dealers face a flat tax of thirty percent. While this is not atypical of French income tax rates, it is the lowest percentage applied to cryptocurrencies. Both crypto miners and professional dealers face tax rates of forty five percent.
The way that things are currently handled essentially prohibits the viable use of Bitcoin and other currencies as a form of payment. Determining at which points what taxes must be paid is complex, and the outcome is far from favorable.
Push by One Deputy of French Parliament Focuses on Dramatic Policy Shift
Much of the current push to reform the way France handles digital money is coming from Pierre Person, a member of the French Nation Assembly, the one that has been serving on the Finance Committee during 2017 and 2018. He seeks to simplify the holding and use of digital money in France, making it more attractive for businesses in that sector.
He has stated that a 30% flat tax rate would be more appropriate for all crypto holders and that this solution was much better than increased rates for professional use. He has further put forward that payments using this type of money shouldn’t be taxable at all unless they exceed three thousand euros.
Person’s proposed changes would also include allowing for organizations in France to make payments to employees and other businesses with cryptocurrencies, which is currently not allowed. Removal of the rules against claiming capital losses on cryptocurrencies is another key part of his plan.
Most Recent Changes Bring Increased Scrutiny for Crypto Companies
While regulators in France have been slow to move forward with any potential changes that might stimulate the use of digital money, they have shown no such reluctance to impose additional restrictions. In fact, recent changes have set a slew of new regulations for businesses to follow, which made it even harder for them to do their job and much harder for digital money to find its place in this country.
A series of new regulations came into effect in June 2021, and people are still getting used to them, and trying to find a way to change them. The ordinance responsible for the regulations was issued in December 2020 and gave a deadline of June 9th, 2021, for all affected businesses to come into compliance. Many companies complained because of this decision, but the regulations are still in effect.
Among these are rules requiring tighter know your client (KYC) requirements. In effect, anonymous transactions using digital money are completely outlawed, so it is impossible to use them at all. While at one point there was a limit of €1000 before a company would be liable for KYC checks, there is no longer any such exemption. That makes using digital money impossible, and no one can say if it will change in the future.
KYC requirements have also been expanded to include more businesses, any crypto companies offering services on the French market. This now includes exchanges that trade exclusively in cryptocurrencies without any transfer of Euros or other official currencies and a variety of other trading platforms.
These same companies must now register with the Financial Markets Authority in order to offer their services in France, and they cannot operate without that registration. This process requires verification of managers and stakeholders, along with the obligation to enact French anti-money laundering requirements. In that way, the French government protects itself from possible frauds and makes sure that every company is operating by the law. On the other side, it is not something that firms are happy about, but the problem is that there is no other way for them to offer their services in this country.
Registering with the Financial Markets Authority also gives firms the option to register for a voluntary license. Getting this license requires financial statements, proof of professional liability insurance, and further details about the business, and every company needs to provide them in order to get the license. It is expected that these licenses will confer some benefits under an anticipated European Union cryptocurrency framework, so many firms are deciding to get them.
Much of this additional scrutiny has been implemented as a result of complaints attributed to various bitcoin-related get-rich-quick schemes by the authorities. One of these is named “Bitcoin Prime,” and it has been branded as a “cloned scam” by industry website ScamCryptoRobots.com.
Path Forward Unclear for Crypto Users in France
The actions of France’s lawmakers leave the future of cryptocurrency in the nation uncertain, and the time will show how it all will work. People are still waiting for the option to use digital money without any restrictions like many countries do. Increased regulations on crypto firms are welcomed by some and considered an overreach by others, and enforcement of these policies is another key area of concern. For the firms that are complying, the regulations may seem somewhat one-sided, and complaints are the only way to try to change it.
These types of regulations can be seen as an important step in legitimizing digital money for expanded use in business and personal life, so everyone can use it in everyday life. However, lawmakers aren’t easing any of the burdensome tax ramifications and policies that are limiting the legitimate use of digital money, and it is not the most likely that they will. While the continued push to improve the situation is well underway, France’s cryptocurrency situation is showing slow or even backward progress, which is definitely not a good thing. Maybe all of that will change in the future, but for now, things are not great for digital money in France.