Cryptocurrencies are experiencing an unprecedented craze. These completely virtual digital “currencies”, initially used as a means of payment or exchange, have evolved into instruments of financial speculation. Faced with the “classic” savings products, they gradually established themselves in the minds of investors as “respectable” diversifying investments. Really?
Written by Olivier Collin – Perspectives – Privately Held, Asset Management Firm – Annecy
“The Pacte Act allowed insurers to include cryptoassets in life insurance contracts. Sign of legality … or follow? “
Redeem the pipe
Elon Musk’s enthusiasm undoubtedly helped push the price of bitcoin above $ 60,000 … Stratospheric! Thus, it shows an impressive growth of over 500% in a year! The most famous cryptocurrency has undoubtedly rewarded those who were brave enough (or didn’t pay attention?) To invest in this volatile asset, with a sulfur reputation that has long been reserved for highly skilled traders, computer geeks and even various activities.
The market today seems to be encouraged by both institutional investors (large companies, investment funds, etc.) and individuals who come in droves to attend the ball. Fidelity, one of the world’s largest asset managers, has set up a Bitcoin fund for high-income investors with a 5% investment allocation recommendation.
Citibank, America’s third-largest bank, has made a bold prediction that investments in bitcoin could surpass $ 300 million by the end of 2021. Fear of not being or a self-fulfilling prediction? In any case, pure speculation for an asset whose value depends only on the logic of the flow, without any economic basis …
The wolf in the sheepfold
The Pacte Act allowed insurers to place cryptoassets in life insurance contracts through dedicated professional funds (FPSs) subject to the applicable liquidity and valuation rules. The fact that they have now legally taken their place in the French’s preferred location would that be a sign of legitimacy … or of following?
Insurance companies will still have to agree to offer their customers such a unit of account. Rare. Even if Bitcoin has recovered in recent months after years of hesitation and volatility, its controversial image could scare off conservative insurers such as clients of the “rich”. Hence, it is not won.
Bercy in starting blocks
Considering the overpricing of virtual currencies, media exposure and the state of government finances, Bercy will not ignore the lucky winners of cryptocurrencies. Effective 1 January 2019, income from digital assets is effectively taxed at a rate of 30% *. A find to quickly raise money into the (empty) treasury …
This tax will apply in the case of an exchange for an official currency (for example, Bitcoin VS Euro) or the purchase of a service or product in Bitcoin (surprise!) … Only a simple exchange between cryptocurrencies (for example: Bitcoin VS ethereum)) or realized capital gains of less than 305 euros per family throughout the year.
Bercy had it all planned. While some investors may view these assets as a diversification tool and invest part of their portfolio, it is imperative to take into account the risks associated with their extreme volatility and their speculative nature, not related to any economic reality. Because, dream not, cryptocurrencies are not an asset class like any other. This is an explosive playground that we will deliberately stay away from …
* Or: 12.80% of article 200 C CGI (not to be confused with “flat tax” article 200 A CGI) + 17.20% for social security contributions.