France has been extremely active with its regulatory frameworks in the last couple of weeks. First, it started with the permanent adoption of ESMA regulations, which means that crypto CFDs will become harder and harder to offer to the locals. Now they have concocted a regulatory framework, first of its kind of the country. According to the bill passed by parliament last week, cryptocurrency assets will be recognized in France, in order to give tax collectors the opportunity to tax crypto companies located within the borders. This may not be the best news a crypto company can come across but for tax collectors and local governments its a godsend.
How will the government track crypto transactions?
It is already known that it is either impossible or very hard to track transactions within the Blockchain. However, the records that the companies’ accounting teams have been keeping will be given even more attention as they will soon become paramount for the government to “tax the companies accordingly”. In fact, there is a chance that in the future, we may see an amendment in the regulatory framework, preventing direct transactions from the Blockchain. This would completely destroy the whole idea of the Blockchain, but that is not an issue for the government. What is the issue, is the collection of those taxes and ways to document them.
Therefore, traders may be forced to utilize channels such as PayPal to make or withdraw payments. This will be quite handy in the wake of the new regulation as crypto companies have not been able to reimburse their customers in the past. According to the new law, however, any lost or fraudulent transaction needs to be “given back to the customer”. Given the fact that Blockchain transactions can’t be reversed, it puts PayPal slightly above as a payment option. You can find more info about buying BTC with PayPal here. It may be useful as it could become a staple for making crypto transactions in the EU.
France pushing its luck
After this “successful” implementation of the new regulatory framework, Bruno Le Maire, the French Minister of Finance announced that it is now his agenda to persuade more and more European states to adopt France’s framework, calling it the best existing solution yet. Although it may sound condescending or arrogant from the minister, it certainly makes sense. In order to avoid a maze of regulations within the European Union, it would be best if countries adopted similar regulatory frameworks for cryptocurrencies, with a few variations here and there. This will definitely lighten the job for crypto firms to adapt and optimize their reporting processes to make tax payments on time and on point.
No matter what happens, France has at least put forward a prototype which can be used by other countries during the development of their own regulation. Once a couple of months have passed and the statistics about collected tax payments have been made. We can start seeing dozens of EU states start working on their own framework, depending on the success rate of course.
Giorgi is a news reporter and financial analyst at www.forexnewsnow.com He has 3 years of experience in analyzing the financial markets of Forex and cryptocurrencies. He also likes making hidden jokes in his articles.