France Finally Legalizes Lombard Credit Backed By Cryptos

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:

• Without dispossession: you keep your cryptos, no transfer, no tax;
• With dispossession: if your assets are transferred without individualized tracking, possible reclassification as a sale.

In other words, a tax lawyer becomes mandatory. To avoid innovation turning into an administrative disaster.

Here are the key data to remember :

• Effective date: April 30, 2025;
• Relevant law: DDADUE 5;
• Instruments concerned: cryptos as collateral;
• Risks for banks: impact on solvency ratios;
• Common use case: almost non-existent to date.

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.

Could crypto Lombard credit be a Trojan horse to repatriate cryptos on centralized platforms?

MiCA aims to reassure. But for now, it intrigues more than it convinces. As long as the banking infrastructure does not follow, the promise remains dead letter.

France’s slowness on cryptos no longer surprises anyone. Even Michael Saylor, on his American pedestal, singles out this inertia. And invites the country’s players to adopt bitcoin more, rather than regulate it the old way. For now, the Hexagon regulates. It moves forward, but in small steps. Too small? Time will tell.