France has introduced a new framework allowing individuals to use digital assets as collateral for Lombard loans. This development, effective since April 30, 2025, amends the French Monetary and Financial Code in order to permit the pledging of crypto-assets in exchange for euro-denominated loans from banks or neobanks.
Unlike traditional sales that might trigger tax events, this mechanism enables holders to access liquidity without relinquishing ownership of their cryptocurrencies.
Lombard loans, historically rooted in medieval banking practices where borrowers pledged valuables like gold or jewelry for short-term credit, have evolved considerably.
Named after the Lombardy region in Italy, these loans typically involve securing funds against marketable securities or assets at a fraction of their value—often 40-50% to mitigate risk.
In the crypto context, this means depositing, say, €100,000 worth of Bitcoin to borrow €40,000 in euros.
This approach mirrors decentralized finance (DeFi) protocols but operates within a regulated traditional finance (TradFi) environment, providing a hybrid solution that could appeal to institutional and retail investors.
The legal framework establishes a clear path for nantissement— the French term for pledging— of digital assets, creating a bridge between the volatile world of crypto and the stability of conventional banking.
Currently, the process is considered tax-neutral, meaning no immediate capital gains tax is imposed upon pledging.
However, fiscal experts caution that this interpretation remains debated among professionals.
Arnaud Touati, a lawyer specializing in fintech, highlights the uncertainties:
“Despite its advantages, the Lombard credit raises fiscal questions. Regulations are still unclear regarding the declaration of capital gains linked to pledged assets… We strongly recommend legal consultations.”
He also notes that the European Union is contemplating a specialized regime, drawing inspiration from France’s PACTE law, which could standardize crypto pledging across member states similar to securities accounts.
This update arrives amid growing global acceptance of cryptocurrencies. France, already a leader in European crypto regulation with initiatives like the MiCA framework, is positioning itself as a hub for financial innovation.
For crypto holders, the benefits are manifold: it offers leverage without liquidation risks in bear markets, preserves potential upside from asset appreciation, and facilitates real-world spending or investments.
Imagine a Bitcoin investor needing cash for a property down payment—now, they can borrow against their holdings rather than selling at a potentially inopportune time.
Yet, challenges persist.
The high volatility of cryptocurrencies could lead to margin calls if asset values plummet, forcing additional collateral or repayment.
Moreover, the lack of comprehensive EU-wide rules means cross-border implications are unclear, potentially deterring international adoption.
Touati emphasizes the need for vigilance:
“The legislator is reflecting on a specific regime… to better frame these operations and secure patrimonial rights.”
This step could accelerate the mainstreaming of digital pledges, encouraging other nations to follow suit.
As blockchain technology matures, such integrations may democratize access to credit, blending the efficiency of crypto with the safeguards of regulation.
France’s seemingly proactive stance not only aims to boost economic flexibility but also signals a maturing ecosystem where digital and traditional finances coexist more harmoniously.
