Crypto Taxes: The End of the Decentralization Dream?

The Paradox Shaking Crypto

Bitcoin’s original promise was clear: to create a decentralized currency, free from the control of states and banks. Sixteen years later, the reality is quite different. While the technology remains decentralized, its usage and regulation are increasingly centralized. The latest example? The fiscal offensive by states aiming to tax cryptocurrencies in all their forms.

In France, the proposed law to create a "tax on unproductive wealth" including cryptos has caused a major uproar. If adopted, this measure would tax the mere holding of cryptocurrencies, even without any sale. It signals the end of anonymity and fiscal independence for crypto holders.

This paradox raises a fundamental question: is decentralization still possible in the face of state power? More importantly, how can the cypherpunk ideal be reconciled with fiscal reality?

At Crypto P2P Club, we believe true decentralization is not the absence of rules, but transparency and fairness in their application. Let’s analyze this paradox together and propose an ethical path forward.

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1. The Fiscal Offensive: How States Are Regaining Control

The Tax on Unproductive Wealth in France

The most emblematic measure of this new fiscal wave is the transformation of the IFI (Real Estate Wealth Tax) into the Tax on Unproductive Wealth. Here’s what you need to know:

If adopted, this measure would mark a major turning point. Until now, cryptos were only taxed upon disposal (sale) at a flat rate of 30%. Tomorrow, a holder of €2 million in Bitcoin could owe €20,000 in taxes annually, even without realizing any capital gains.

This proposal has sparked strong reactions, notably from Eric Larchevêque, co-founder of Ledger, who calls it a "major ideological mistake" aimed at "punishing the holding of value outside the fiat monetary system" [1].

The International Trend: Toward Total Transparency

France is not alone. Globally, the trend is toward total fiscal transparency:

• Mandatory KYC: 95% of centralized exchanges require identity verification.
• Automatic reporting: exchanges automatically share client data with tax authorities.
• CARF (Crypto-Asset Reporting Framework): starting in 2027, countries will automatically exchange tax information on crypto assets [2].

A recent study from the University of Illinois showed that this fiscal transparency directly impacts compliance and crypto prices [3]. In other words, fiscal anonymity is disappearing.

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2. The Paradox of Decentralization: Why the Promise Has Vanished

Re-centralization Through Usage

The main issue is that although the technology is decentralized, its usage is massively centralized:

• 80% of cryptos are held on centralized exchanges (Binance, Coinbase, etc.).
• Most users prefer ease of use over the sovereignty of self-custody.
• Exchanges are the touchpoints between fiat and crypto worlds, thus the states’ control points.

Individual Sovereignty: A Theoretical Ideal

The promise to "be your own bank" has become a theoretical ideal for most users. In practice, they rely on centralized intermediaries subject to state laws. Censorship resistance and individual sovereignty are real only for the minority who use non-custodial wallets and DEXs (decentralized exchanges).

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3. Crypto P2P Club Vision: Toward Ethical and Transparent Taxation

Is Taxation Legitimate?

At Crypto P2P Club, we are not against taxation per se. Crypto holders benefit from public infrastructure and it is fair they contribute to its funding. However, taxation must be fair, transparent, and coherent.

Problems with current taxation:

• Double taxation: risk of paying taxes on both holding AND disposal.
• Volatility: how to tax an asset that can lose 50% of its value in a month?
• Liquidity: how to pay holding tax without selling?
• Inconsistency: taxing holding while wanting to create a strategic Bitcoin reserve is contradictory.

Our Proposal: Fiscal "Code as Transparency"

Rather than endure opaque and punitive taxation, we propose promoting ethical and transparent taxation for cryptos. Key principles:

1. Total transparency: clear, stable, and understandable tax rules for all.
2. Predictability: no retroactive rule changes.
3. Coherence: a harmonized approach that does not penalize holding.
4. Fairness: accounting for asset volatility and liquidity.
5. Automation: simple, automated tax reporting to ease compliance.

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Conclusion: Two Paths Forward

In the face of this fiscal offensive, two paths emerge for crypto holders:

Path 1: Accept Re-centralization

• Cryptos become a financial asset like any other, regulated and taxed.
• Loss of the cypherpunk ideal, but gain in legitimacy and mainstream adoption.

Path 2: Resist Through Real Decentralization

• Exclusive use of DEXs, self-custody, and privacy solutions.
• Preservation of the cypherpunk ideal, but risk of marginalization.

At Crypto P2P Club, we propose a third path: an ethical and transparent decentralization. We must accept regulation but demand it be fair, transparent, and coherent. We must promote fiscal education and defend crypto taxpayers’ rights while encouraging self-custody as a fundamental principle.

True decentralization is not anarchy, but the ability of each individual to make informed choices within a fair and transparent framework. This is the fight we must lead.

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References

[1] BFM TV. (2025, November 3). "A major ideological mistake": the tax on unproductive wealth is also bad news for large cryptocurrency holders in France. https://www.bfmtv.com/crypto/une-erreur-ideologique-majeure-l-impot-sur-la-fortune-improductive-est-aussi-une-mauvaise-nouvelle-pour-les-gros-detenteurs-de-cryptomonnaies-en-france_AV-202511030525.html

[2] OECD. (2025). Jurisdictions committed to implement the Crypto-Asset Reporting Framework (CARF). https://www.oecd.org/content/dam/oecd/en/networks/global-forum-tax-transparency/commitments-carf.pdf

[3] Gies College of Business. (2025, October 13). How tax regulation, transparency are reshaping cryptocurrency. https://giesbusiness.illinois.edu/news/2025/10/13/how-tax-regulation--transparency-are-reshaping-cryptocurrency