France's Bitcoin reserve shock proposal! Buying 420,000 coins over 8 years to counter US dollar hegemony.

Eric Ciotti, leader of the French right-wing party “The Republicans' Right Alliance” and member of the National Assembly, officially submitted a shocking proposal to the French National Assembly on October 28, planning to position Bitcoin as “digital gold”. He suggested that the government gradually purchase about 420,000 Bitcoins over the next 7 to 8 years, which accounts for about 2% of the total Bitcoin supply, to combat inflation and the dollar hegemony through national Bitcoin reserves.

42 million Bitcoin reserve plan details

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The bill proposes the establishment of a specialized “French Bitcoin Strategic Reserve Public Institution” responsible for managing this batch of digital assets. The acquisition period will be carried out gradually over 7 to 8 years, with the goal of making Bitcoin the “new gold” in the fight against inflation and the dominance of the dollar. 420,000 Bitcoins account for about 2% of the total supply of 21 million Bitcoins. Based on the current Bitcoin price of approximately $110,000, the total value of this Bitcoin reserve will reach about $46.2 billion.

This ratio may seem small, but it has significant strategic importance at the national level. Currently, the Bitcoin held by governments around the world mainly comes from judicial seizures, and no country has actively engaged in such large-scale systematic purchases. If France truly implements this plan, it will become the world's first major economy to use Bitcoin reserves as an official national strategy, potentially triggering a follow-up effect from other countries.

The 7 to 8 year acquisition period is designed to avoid excessive market impact. If France were to purchase a large amount of Bitcoin in the short term, it could lead to a price surge and trigger market speculation. By gradually purchasing, France can spread costs over different price levels while giving the market enough time to absorb this added demand. An average of about 52,500 to 60,000 Bitcoins needs to be acquired each year, which is a small fraction of the current annual Bitcoin production, and the market should be able to absorb it.

The establishment of the “French Bitcoin Strategic Reserve Public Institution” signifies that it will be an independent professional entity, rather than directly managed by the Ministry of Finance or the central bank. This structural design may be aimed at isolating political risks, ensuring the professionalism and continuity of Bitcoin reserve management, which will not be interrupted by changes in government. This institution will need to formulate detailed purchasing strategies, secure custody agreements, and risk management frameworks.

Four Major Funding Source Innovation Mechanisms

To avoid crowding out the fiscal budget, the proposal designed multiple funding sources, which is the most innovative part of the entire plan. First is public mining, utilizing France's nuclear and hydropower surplus for low-cost Bitcoin mining. France is the largest nuclear power country in Europe, with about 70% of its electricity coming from nuclear energy, and there are often situations of electricity surplus. Using this excess electricity for Bitcoin mining not only allows for the acquisition of Bitcoin but also improves energy utilization efficiency.

Secondly, there is judicial confiscation, which retains the Bitcoin seized in court proceedings. Currently, many countries choose to auction off seized cryptocurrencies, while this proposal from France suggests directly retaining these Bitcoins as part of strategic reserves. This approach does not require additional financial expenditure; it merely changes the way existing assets are disposed of.

The third source is the national savings allocation, which withdraws a quarter of the funds from popular savings accounts, purchasing 15 million euros in coins daily. This is the most controversial source of funding because it involves the use of citizens' savings. The proposal may refer to government-backed savings accounts similar to “livret A,” part of whose funds are used for public investment. If 15 million euros are purchased daily, about 5.475 billion euros will be invested in a year, totaling about 43.8 billion euros over 8 years, which is roughly consistent with the target value of 420,000 Bitcoins.

Source of Funds and Expected Contributions:

Public Mining: Utilizing surplus nuclear and hydroelectric power, it is expected to mine thousands to tens of thousands of Bitcoin each year.

Judicial Seizure: Retain seized Bitcoin, contribution uncertain but no additional expenditure required.

National Savings Allocation: 15 million euros daily, approximately 5.475 billion euros annually, totaling 43.8 billion euros over 8 years.

Tax Payment in Bitcoin: Allows taxpayers to pay taxes in Bitcoin, subject to constitutional review.

The fourth is tax payments in Bitcoin, allowing taxpayers to pay taxes in Bitcoin (subject to constitutional review). This is a two-way mechanism: on one hand, it encourages citizens to hold and use Bitcoin, and on the other hand, it provides the government with an additional channel to obtain Bitcoin. However, this measure needs to undergo constitutional review, as it involves a fundamental change in the method of tax payment and may face legal obstacles.

Strategic Intent to Counter Dollar Hegemony

The political intention of the proposal is very clear: to challenge the hegemony of the US dollar and lead a new landscape for cryptocurrency in Europe. France, as a core country of the EU and a traditional power, has long held reservations about the dominant position of the dollar in the international financial system. During the de Gaulle era, France once challenged the Bretton Woods system, demanding that dollar reserves be exchanged for gold. This proposal for Bitcoin reserves can be seen as a continuation of this tradition in the digital age.

The dominance of the US dollar is built on several pillars: global trade is primarily priced and settled in dollars, central banks of various countries hold large reserves of dollars, and commodities such as oil are traded in dollars. This system gives the United States significant economic and political influence, but also exposes other countries to the risks of changes in dollar policy. When the Federal Reserve implements quantitative easing or tightening policies, global capital flows and exchange rates are impacted.

Bitcoin reserves, as a decentralized asset not controlled by any single country, provide France with a tool to hedge against dollar risk. If Bitcoin truly becomes “digital gold” and is accepted by more countries, it could become part of the international reserve system, reducing dependence on the dollar. This strategic thinking aligns with the trend in recent years of some countries increasing gold reserves while decreasing dollar reserves.

From a European perspective, if France's proposal is successful, it may encourage other EU member states to follow suit, forming a prototype of a European cryptocurrency strategy. Although the EU is promoting the digital euro, the French right clearly opposes CBDC, believing it threatens monetary sovereignty and privacy. In contrast, decentralized Bitcoin aligns with their ideals of freedom and sovereignty.

Anti-CBDC Support Euro Stablecoin Policy Mix

In addition to the Bitcoin reserve strategy, the proposal also presents a series of crypto-friendly policies. First is the clear opposition to the digital euro, viewing the EU CBDC as a threat to monetary sovereignty and privacy, advocating for legislative prohibition. This stance reflects the concerns of right-wing parties regarding centralization and government surveillance. If implemented, the digital euro would grant the European Central Bank unprecedented power to track and control every transaction, which is seen as a threat to individual freedom.

In contrast, the proposal encourages Euro stablecoins, supporting European enterprises to issue stablecoins pegged to the Euro, replacing the dominance of US dollar stablecoins. Currently, the global stablecoin market is dominated by US dollar stablecoins like USDT and USDC, with a very small market share for Euro stablecoins. If Europe can promote the development of Euro stablecoins, it can challenge the dominance of the dollar in the digital payment space while maintaining decentralization and privacy protection features.

Finally, the bill also considers that the registration of cryptocurrency businesses should be simplified, transaction taxes lowered, and tax exemptions provided for miners. These measures aim to make France a cryptocurrency-friendly jurisdiction, attracting blockchain companies and crypto miners to establish operations in France. France has rich nuclear power resources, and if tax incentives can be offered, it could become the center for Bitcoin mining in Europe.

This policy combination demonstrates a clear strategic logic: opposing centralized CBDCs, supporting decentralized Bitcoin, encouraging market-driven stablecoins, and creating a favorable regulatory environment. If these policies are truly implemented, France could become a leader in cryptocurrency innovation in Europe.