- France advances €5K self-custody crypto reporting rule.
- Government, tax agency warn of privacy and security risks.
- Bill heads to the joint committee amid strong opposition.
The French National Assembly has voted to make it compulsory for owners of self-custody wallets to declare their assets to tax authorities. On Tuesday, the lawmakers adopted the article as a part of a broader anti-fraud bill.
Concerns Grow Over Centralization of Sensitive Crypto Data
Section 3 of the bill requires non-custodial wallet owners with their funds above €5,000 to report the fair market value of their holdings to the French tax administration annually.
A member of Parliament and the Vice President of the Finance Committee, Daniel Labaronne, objected to the article and pushed for its deletion. According to Labaronne, who was appointed by the lawmakers to investigate the potential impact of the non-custodial tax reporting, the European DAC8 (Directive on Administrative Cooperation, 8th amendment) framework already included regulated providers, and an extra national reporting requirement would make the law cumbersome.
Labaronne’s stance also aligns with that of the government and the Directorate General of Public Finances, which is responsible for tax collection, management of public expenditure, and auditing.
“The DGFIP,” said Labaronne, “is not asking for this mechanism. For how could it possibly monitor the holding of this type of assets?” “Similarly, how to monitor whether an individual owns a piano at home?”
Additionally, the DGFIP warned that enforcing a nationwide declaration of non-custodial wallet holdings could result in the “centralization of highly sensitive data,” such as the identities of wallet owners and the funds in their possession.
The tax administration also highlighted that providing this information increases wallet owners’ vulnerability during cyber attacks. Hackers would instinctively target such massive databases to obtain information that could help them defraud wallet holders en masse.
Amendment Survives Vote, Heads to Joint Committee
French Minister of the Budget, Amiel David, who oversees national budgetary policy, tax policy, and public spending, also threw his weight behind the motion to delete the amendment.
Meanwhile, the French left wing remains resolute about passing the article and seeing it implemented. The President of the Finance Committee, and a far-left lawmaker from the France Insoumise (LFI) party, Eric Coquerel, challenged Labaronne’s position with respect to the tax administration’s stance.
The Finance Committee President pressed for extra proof or evidence to substantiate the DGFIP’s stance, citing that the agency may not be being transparent enough in this case.
Ultimately, the deletion amendment was turned down (40-12). The article will proceed to a Joint Committee for negotiations to see if a compromise is possible.
However, the Senate has not previously approved any such article and experts, and those intimate with events in parliamentary events in the country believe negotiation efforts could crash on arrival, given the government’s glaring opposition to it.
Similarly, the general public temperature suggests that citizens want the amendment repealed, with many expressing concern over potential privacy infringement and the complicated reporting responsibilities.
