TLDR
- On October 16, French legislators approved taxing capital gains when swapping crypto for MiCA e-money tokens by a margin of 38 to 37.
- Lawmakers rejected extending crypto loss carryforward to ten years, voting 75 to 18 against the measure.
- Traders may face tax obligations on swaps to stablecoins even when funds remain within the cryptocurrency ecosystem.
- Existing regulations still permit offsetting crypto losses against gains in the same fiscal year.
- Implementation is scheduled for January 1, 2027, contingent upon final budget approval.
French legislators approved a measure on October 16 that would impose capital gains taxation on specific cryptocurrency exchanges involving stablecoins. During the same session, they voted down a companion proposal that sought to extend the period for carrying forward crypto investment losses to a decade.
Both votes occurred in the National Assembly as part of the initial review of France’s 2027 budget legislation. The budget package has not yet received final legislative approval.
Amendment I-3898, addressing taxation of stablecoin exchanges, secured passage with 38 votes in favor and 37 opposed. Twenty-five assembly members chose to abstain.
Amendment I-3653, which proposed the extended loss carryforward provision, was defeated decisively with 75 votes against, 18 in favor, and three abstentions.
Mechanics of the Proposed Stablecoin Exchange Tax
French tax law currently permits private cryptocurrency investors to defer capital gains recognition when exchanging one digital asset for another without converting to fiat currency. This provision enables portfolio rebalancing without immediate tax consequences.
The approved amendment would eliminate this deferral specifically for transactions where investors receive MiCA e-money tokens. MiCA represents the European Union’s comprehensive Markets in Crypto-Assets regulatory framework.
According to MiCA standards, e-money tokens are defined as digital assets designed to maintain price stability by pegging their value to a single fiat currency, including the euro or US dollar.
In practical terms, someone exchanging appreciated Bitcoin or Ethereum for a qualifying stablecoin would trigger a taxable event based on the realized gain. Tax liability would arise despite the transaction occurring entirely within digital asset markets without any conversion to euros or traditional banking deposits.
Taxation would apply to appreciation calculated above the acquisition cost, which establishes the tax basis for the disposed assets. Transaction fees supported by documentation would reduce the taxable amount.
The amendment would also modify cost basis calculation methodology. Rather than averaging costs across an entire portfolio, it would establish basis for specific assets sold, utilizing weighted average cost for identical assets acquired at varying prices.
Completing a taxable exchange would establish a new cost basis for the acquired assets. Conversely, a deferred exchange would preserve the original basis moving forward.
For digital assets acquired prior to 2027, investors may reference their documented historical acquisition costs. Alternatively, they can elect a permanent option to distribute existing portfolio costs across all holdings based on December 31 valuations.
Extended Loss Carryforward Measure Fails
The defeated I-3653 proposal sought to permit cryptocurrency investors to carry unused losses forward for as long as ten years.
Present tax regulations allow cryptocurrency losses to offset gains from digital asset transactions within the same calendar year. Net losses cannot be transferred to subsequent years or applied against profits from different asset categories.
Should the stablecoin taxation rule be enacted without accompanying loss reform provisions, investors would be unable to apply net cryptocurrency losses from previous years to gains realized through covered stablecoin exchanges.
Bitcoin was trading around $81,333 at publication time, representing a 1.83% decline over the preceding 24 hours. Ethereum changed hands near $2,381, down 2.33%.
The budget legislation continues through its first reading phase. A preliminary text dated October 19 maintains the stablecoin taxation provision within Article 4 octies, specifying a proposed effective date of January 1, 2027, subject to final legislative enactment.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
