Crypto Lombard Loan: Borrow Against Your Crypto (France 2025)
Paul Stelizuk
08/14/2025
(08/07/2025)
Disclaimer: The information in this article is for educational purposes only and does not constitute financial, legal or tax advice. You should consult a qualified professional before making any decision.
What is a Crypto Lombard Loan? Definition and How It Works in France 2025
A Lombard loan owes its name to the medieval Lombard bankers from northern Italy who popularised the practice across Europe. It is a loan granted by a financial institution against the pledge of liquid movable assets such as securities, bonds, shares, fund units or precious metals.
The borrower keeps ownership of the assets but pledges them as collateral to obtain liquidity, usually equal to 50-70 % of their deposited value.
Since French Law No 2025-391, the so-called DDADUE 5 Act, authorised institutions may offer a Lombard loan secured by crypto-assets:
- The borrower pledges their cryptocurrencies as collateral with the lender;
- The lender grants a loan proportional to the locked-in crypto value;
- The borrower can use the funds freely without selling their crypto;
- Interest is paid throughout the term of the loan;
- If crypto prices fall sharply, the borrower must top up the collateral. In case of default, the lender sells the crypto to repay itself — that sale triggers a taxable capital gain for the borrower (30 % flat tax);
- At maturity, the borrower repays the loan and recovers the crypto.
Advantages of a Crypto Lombard Loan – Liquidity Without Selling
- Liquidity without disposal: quick access to euros while keeping your cryptocurrencies;
- Continued market exposure: you remain positioned for upside (and downside);
- Deferred taxation: no tax liability as long as the crypto is not sold;
- Limited credit underwriting: because the collateral is key, credit checks are lighter than for a conventional loan and may even be skipped. However, since the CRR3 directive (transposed in France in early 2025), some banks still require a loan suitability test.
Risks and Drawbacks of a Crypto Lombard Loan – What You Need to Know
Bear-Market Risk: Forced Liquidation and no Room for Arbitrage
This is the main hazard. If the pledged crypto plunges, the borrower may face a margin call (demand for extra collateral) or even partial or total liquidation (the lender sells the crypto to repay itself).
When liquidation occurs, the borrower suffers a double blow: losing crypto at an unfavourable price and owing tax on the sale, because the tax liability rests with the borrower, not the lender.
The borrower is left with no strategic flexibility: they cannot wait for a rebound or rebalance their positions. Forced selling, often during market stress or high volatility, can lock in losses, worsen the borrower’s finances and undermine investment or wealth-preservation goals.
A New Regime
This is a recent mechanism on which the tax authorities have not yet ruled and may interpret differently from the financial regulator. As an investor you probably do not want to be a guinea pig, so at the very least file a tax ruling request.
Cost and Complexity
Interest rates on crypto Lombard loans can be higher than on traditional loans. Numerous fees also apply: set-up, collateral monitoring, transfers, etc.
Moreover, a Lombard loan requires constant monitoring of collateral value and proactive management to avoid margin calls and liquidations.
Use Case: A Crypto Lombard Loan for Real-Estate Purchase
Imagine autumn 2025. A buyer believes the bull run has advanced enough to take some profits and become a homeowner. Key questions arise:
- Is the buyer ready to sell crypto throughout a bear market just to pay loan interest?
- If the loan matures and the portfolio has not doubled, how will it be repaid? Sell the property and go back to renting?
- If one of the pledged crypto looks doomed, can the borrower swap it at will, or will any move be impossible ?
30 % Flat Tax on Crypto: Fiscal Impact of a Lombard Loan in France
Taxation is crucial before using a crypto Lombard loan. At first glance it is attractive because it avoids crystallising a taxable capital gain at loan inception: in France, pledging crypto for a loan is not a taxable event per se.
Key point: if repaying the loan requires selling crypto, or if part of the collateral is liquidated, the French investor cannot escape capital-gains tax. Gains on crypto sales are taxed at a 30 % flat rate (12.8 % income tax + 17.2 % social levies) unless the Exceptional Contribution on High Income (CEHR) applies.
- No interest deduction: loan interest is not deductible from crypto capital gains.
- Fiscal uncertainty: deferring tax may seem smart, but given France’s public-finance needs, heavier taxation could loom, especially on large sums under a progressive schedule. The monetary code may have green-lighted the product, yet the tax office has not issued official guidance; caution is advised.
If a nasty surprise arises, the borrower alone bears the cost, with no recourse against lender or intermediaries (banks, lawyers, etc.).
Alternatives to a Lombard Loan: DeFi and CeFi Borrowing
Long before the French law change, crypto holders could borrow by pledging assets on decentralised-finance platforms (MakerDAO, Aave) or centralised services (Nexo, Binance).
The principle is similar: deposit crypto as collateral and borrow stablecoins, then find a way to use the stablecoins for your project.
These options suit savvy users and involve technical interaction with smart contracts, fluctuating fees and liquidation risk. Choose the right platform, keeping in mind the regular protocol hacks in DeFi and the Celsius case in CeFi, which simply went bankrupt and kept its users’ collateral - leaving a hole of over $4.7 billion.
On the plus side, the borrower stays exposed to the market and often earns yield on the collateral - an alternative that could be combined with emerging solutions such as Legibloq.
An Alternative to Credit: Cash Purchase With Legibloq
Conceived as a bridge between crypto and the traditional economy, Legibloq is the first solution that lets you use crypto for real estate purchases.
How it works:
- Legibloq checks your eligibility to ensure the transaction is compliant.
- Your crypto is deposited in an escrow account run by an AMF-registered PSAN.
- Funds are converted to euros only at each call for funds and wired to a notary’s or lawyer’s escrow account.
- If the purchase is cancelled, Legibloq returns the crypto without conversion, so no flat tax is triggered.
Advantages:
- No regulatory risk: compliance work done upfront with regulated professionals (notaries, lawyers).
- No banking risk: your bank is never involved.
- No unnecessary tax: no flat tax if the purchase is cancelled.
- No hidden fees: you know the full cost before using the service.
Want to use your crypto without a loan? Discover Legibloq →
Should You Take Out a Crypto Lombard Loan in 2025?
A crypto-backed Lombard loan is an appealing option for sizeable holders seeking immediate liquidity.
Yet it is no trivial instrument: it effectively adds leverage to a portfolio already containing inherently risky digital assets, with potentially severe financial and fiscal consequences in an adverse scenario.
Before signing, make sure to:
- Understand liquidation mechanics and safety margins;
- Scrutinise contractual terms and fees;
- Consider long-term tax implications;
- Evaluate available alternatives;
- Consult a financial and tax adviser specialising in digital assets.
Whether you choose a loan like the Lombard or a cash-purchase solution like Legibloq, your decision depends on your profile, project and risk appetite.