France Moves to Crackdown on Self-Custodied Crypto With Strict New Reporting Rules in Proposed Budget

French lawmakers have taken a decisive step toward tightening oversight of the digital asset sector, backing a new legislative proposal that would compel holders of self-custodied cryptocurrencies to report their holdings. Under the measure, anyone holding digital assets valued at or above 100,000 euros—equivalent to approximately $112,000—outside of centralized exchanges or custodial services would be legally required to declare them to tax authorities. Failure to comply with these proposed disclosure rules would expose asset holders to significant financial penalties.

The amendment, officially designated as amendment number I-CF821, was successfully adopted by the Finance Committee of France’s National Assembly on Friday. If ultimately enacted, the provision would fundamentally alter how personal wallets and self-managed digital asset holdings are treated under French tax law, bridging a long-standing oversight gap that has concerned fiscal authorities seeking to capture the full scope of private wealth held in cryptocurrencies.

Expanding the General Tax Code to Personal Wallets

The newly adopted proposal is designed to amend France’s general tax code by introducing rigorous reporting mandates specifically targeting cryptocurrencies and digital assets that are not managed by a registered crypto-asset service provider. This encompasses a wide variety of decentralized storage solutions, including hardware wallets, software-based mobile and desktop wallets, and other forms of self-custody where the individual retains exclusive control over their private keys.

According to the text of the amendment, individuals meeting or exceeding the 100,000-euro threshold would be mandated to disclose the aggregate value of their holdings calculated as of December 31 of each tax year. The measure aims to ensure that substantial wealth stored away from traditional financial intermediaries and centralized trading platforms is brought into the daylight of national tax administration.

To enforce compliance, the proposal outlines a strict penalty regime. Taxpayers who fail to declare their qualifying self-custodied assets could face administrative fines of up to 10,000 euros per infraction. The lawmakers behind the measure argue that such penalties are necessary to deter non-compliance and ensure that the reporting requirement carries meaningful weight.

The primary motivation driving the initiative is a concerted government effort to combat tax evasion within the rapidly expanding digital economy. Sponsors of the amendment pointed directly to findings from a recent parliamentary inquiry focused on the taxation practices of wealthy individuals. That inquiry revealed a striking discrepancy between reported figures and actual market activity: while French taxpayers generated an estimated 3.5 billion euros in crypto capital gains during 2021, a mere 400 million euros in crypto holdings were formally declared to tax authorities for that same tax year. Lawmakers view this massive gap as clear evidence of widespread underreporting and a leakage of potential tax revenues.

Parliamentary Origins and Wider Tax Measures

The wallet disclosure measure was introduced by Charles de Courson, Jean-Pierre Bataille, and Michel Castellani, three deputies belonging to France’s Liberties, Independents, Overseas and Territories, known by the French acronym LIOT, parliamentary group. Their amendment was part of a broader push by the Finance Committee, which adopted a total of five distinct crypto-related amendments during its deliberations last week.

This cluster of proposals forms part of a broader legislative effort to reshape how digital assets are taxed in France. Among the other notable measures previously reported in the financial and technology press are plans to impose an exit tax on cryptocurrency holdings exceeding 800,000 euros when resident taxpayers decide to move abroad. Additionally, lawmakers have sought to eliminate existing tax deferral benefits that currently apply when investors convert their cryptocurrencies into fiat-backed stablecoins, a move that could significantly alter the trading and portfolio management strategies of French crypto investors.

These coordinated amendments signal an increasingly assertive regulatory stance by French policymakers, who are eager to integrate the digital asset ecosystem firmly into the nation’s traditional fiscal framework ahead of the upcoming budgetary cycles.

Navigating Legislative Hurdles in the National Assembly

Despite the initial success of securing approval within the Finance Committee on Friday, the broader legislative journey for these proposals remains highly uncertain. In a dramatic political twist immediately following the committee’s crypto votes, lawmakers subsequently rejected the revenue section of the broader 2027 budget bill by a decisive margin of 31 votes to 3.

This rejection of the overarching revenue chapter means that the specific amendments approved by the committee do not yet possess the force of law and face immediate procedural hurdles. The legislative battleground now shifts back to the floor of the National Assembly, where lawmakers are scheduled to begin formal debates on the revenue section of the budget starting from the government’s original, unamended draft.

Because the Finance Committee’s version was set aside when the broader revenue section was voted down, the crypto-related amendments—including the self-custody reporting requirement, the stablecoin swap tax modifications, and the crypto exit tax provisions—do not automatically carry over into the upcoming parliamentary floor debates. To become part of the final legislation, these provisions must be formally reintroduced, debated, and re-approved during the proceedings in the National Assembly. Observers of French parliamentary procedure note that while committees play a vital role in shaping initial drafts, the ultimate fate of such contentious fiscal measures will depend heavily on the shifting political dynamics and negotiations on the assembly floor as the government pushes to pass its budgetary legislation.