France Unveils Framework Allowing Crypto as Collateral for Euro Loans

Starting April 30, 2025, France introduced a regulatory change enabling crypto-assets to be used as collateral for Lombard credits [1]. This development allows individuals and businesses to secure euro-based loans without selling their digital assets, provided the crypto is held with an authorized CASP (Crypto Asset Service Provider) bank. The move marks a discreet but significant step toward integrating cryptocurrencies into traditional financial systems [1].

Previously, the absence of a clear legal framework hindered the use of crypto as collateral in lending arrangements. Now, borrowers can maintain ownership of their digital assets while accessing liquidity for purposes such as real estate purchases or business projects [1]. This shift reflects a growing institutional acceptance of crypto as a legitimate asset class, rather than solely as a speculative tool [1].

However, the practical application of these loans remains constrained. Only a limited number of authorized banks offer the product, and prudential regulations require banks to hold an equivalent amount in own funds for every euro lent. This requirement limits the scalability of such loans and makes them less attractive for broader adoption [1].

Paul Bureau, Digital Asset Product Offer Director at Delubac & Cie, highlighted that not all crypto assets are equally eligible for such loans. At his institution, only highly liquid and well-capitalized assets like BTC and USDC are considered. Additionally, compliance plays a central role, requiring full traceability of the funds' origins and the use of loan-to-value (LTV) ratios that account for volatility [1].

Asset custody also remains a key challenge. Crypto assets must be deposited on controlled platforms or in partnership with the lending institution, necessitating robust custody solutions. While Delubac & Cie specializes in secure crypto custody in France, the complexity of 24/7 monitoring and real-time valuation of assets adds to the operational burden for banks [1].

Ambroise Helaine, France director of Bybit EU, noted that while this is not yet a revolution in usage, it represents a symbolic turning point. The existence of a legal framework to leverage cryptos in traditional finance sends a strong signal: digital assets are increasingly recognized as having patrimonial value [1].

In the short term, the adoption of crypto-backed Lombard loans is likely to remain limited to a niche clientele, particularly in wealth management and project financing. However, if European regulations evolve to ease the treatment of digital assets, this could pave the way for broader adoption and new financial tools. The most agile institutions may seize this opportunity to attract a growing investor base that holds significant crypto assets [1].

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Source:

[1] Borrow Without Selling Your Cryptos: What the New French Regulation Changes – Cointribune

https://www.cointribune.com/en/borrow-without-selling-your-cryptos-what-the-new-french-regulation-changes/