Cryptocurrencies, still an underdeveloped means of payment

Cryptocurrency payments, which are still confidential, face various obstacles: taxation of any gains on conversion, unfavorable regulations, asset volatility, high transaction costs... 

Cryptocurrency payments: tax obstacles

While the use of cryptocurrencies is democratizing, and the possibilities for paying for purchases in virtual currency are expanding, there are still many obstacles preventing widespread use of cryptocurrency as a means of payment.

The difficulties are first and foremost tax-related: all purchases of goods and services made in cryptocurrency are, in France, subject to tax. Whether or not the cryptocurrency has first been converted into euros, the rule is currently the same: any capital gain realized on conversion is taxable, above an annual threshold of 305 euros per household.

It's easy to do the math when cryptocurrency payments remain one-off and involve large amounts, but the accounting becomes impossible to keep for the many small, everyday purchases.

Unfavorable regulations

Taxation isn't the only thing holding back the growth of cryptocurrency payments. Regulation is also unfavorable, asit does not recognize cryptocurrencies as a means of payment.

As the Ministry of the Economy and Finance points out, there is nothing legally preventing a merchant from accepting payments in cryptocurrency, but the only official currency remains the euro. According to the Autorité de contrôle prudentiel et de résolution (ACPR), cryptocurrencies do not fully meet the criteria required to obtain currency status.

First of all, these digital assets are far too volatile, posing a danger to consumers and businesses alike. Unlike the euro, which has a certain stability, Bitcoin, Ethereum and other cryptocurrencies can lose much of their value overnight, severely limiting their use as a means of payment for everyday purchases.

What's more, according to the ACPR, these virtual currencies have no intrinsic value, something that cryptoasset advocates dispute.

While some are hostile to market regulation, other players, like startup Lyzi, which wants to democratize the use of cryptocurrencies for everyday payments, are calling for clear tax rules to be in place by 2023.