The French National Assembly narrowly approved a proposal to tax cryptocurrency revenue when investors exchange digital assets for regulated stablecoins. Amendment I 3898 was passed on October 16 by a vote of 38 to 37, with 25 abstentions, during the consideration of the 2027 budget bill.

On January 1, 2027, the plan would end the existing tax deferral for certain transactions. The measure still needs to pass legislation before it can become law, and the French government has voiced concerns about how it will be implemented.

France Approves Amendment I 3898 by One Vote

The suggested change to France's cryptocurrency taxation regulations was decided in a tight vote on October 16. Amendment I 3898, which was introduced by Nicolas Sansu and other parliamentarians, aims to eliminate the tax deferral that is now offered when cryptocurrency assets are traded for eligible stablecoins.

According to the official parliamentary record, 100 parliamentarians took part in the vote, and 75 of them voted in favour of or against the change. It was approved by 38 parliamentarians, rejected by 37, and abstained by 25. As a result, the change was approved while the National Assembly was reviewing the 2027 budget bill.

The outcome does not make the idea a final law, but it does advance it. The parliamentarians' disagreement over how these transactions should be handled for tax purposes is further highlighted by its small margin.

Proposed 31.4% Tax on Regulated Stablecoin Swaps

Instead of allowing investors to postpone payment until a later taxable event, the proposed legislation would impose taxes on the realised capital gain when cryptocurrency is exchanged for a qualifying stablecoin. The proposed rate is 31.4%, and if it passes the legislative process, the adjustment is expected to go into effect on January 1, 2027.

The amendment focuses on electronic money tokens, such as qualifying regulated stablecoins, that are subject to the EU's Markets in Crypto Assets Regulation, or MiCA. Closing the gap that enables investors to transfer valuable cryptocurrency assets into stablecoins without having to pay capital gains tax right away is its main goal.

For instance, an investor who has profited from Bitcoin can now swap it for a stablecoin that qualifies without receiving the same instant tax treatment as a conversion into euros. The exchange would no longer offer the same deferral under the new regulations.

Under the current structure, ordinary crypto-to-crypto exchanges would continue to qualify for tax deferral until a taxable event, such as spending or conversion into fiat money, takes place.

Government Raises Concerns Over Implementation

The French government objected to the proposal, claiming that it would be difficult to implement the suggested approach. Finance Minister David Amiel questioned how stablecoins should be defined for tax purposes and how authorities could consistently monitor transfers between stablecoins and cryptocurrency assets within a portfolio during the parliamentary debate.

Additionally, the minister cautioned against assuming that all stablecoins have a constant value or behave similarly to traditional money. These issues highlight the difficulties in identifying eligible assets and figuring out when a taxable transaction has taken place.

The amendment's proponents contended that investors shouldn't be able to avoid paying taxes just by shifting cryptocurrency gains from euros to stablecoins. They also mentioned the necessity of addressing the underreporting of bitcoin gains and enhancing tax compliance.

Further Budget Votes Will Determine the Outcome

The proposal is still a part of France's 2027 budget process, and before it can be put into action, it needs to pass other legislative stages. The remaining parliamentary actions, including Senate approval, come after the November 3 review, which is one of the next steps listed in the legislative timeline.

Therefore, before the measure becomes effective, its final wording and status may change. The suggested start date of January 1, 2027, should not be regarded as a definite change in French tax law until the legislative procedure is finished.

Concerns have also been expressed in the argument about how taxing swaps into regulated stablecoins would affect investment behaviour. In order to avoid triggering the proposed tax, some market participants are concerned that users may switch to decentralised or non-MiCA-compliant alternatives. This change might make it more difficult to monitor cryptocurrency transactions and compromise the measure's intended scope.

If you find any issues in this article or notice missing information, please feel free to reach out at team@etherworld.co for clarifications or updates.

To promote your Web3 articles, events, and projects, you may reach out anytime via EtherWorld PR for submissions and collaboration.

Related Articles

1. Ledger Wallet Spy Implant Triggers Karpelès Feud
2. Unagi Assets for Sale After Court Ordered Liquidation
3. Jio’s $106B IPO Hits Bitget With 20x Pre-IPO Perps
4. South Korea Blocks 27 Unregistered Crypto Exchanges
5. 95% of India’s Crypto Offshore, ₹57,147 Crore Lost?

To follow blockchain news, track Ethereum protocol progress, and read our latest stories, subscribe to our weekly today.

Join the EtherWorld & Avarch Internship Program and build your career in blockchain, content, social media, video, podcast editing, or operations. Send your resume and brief introduction to contact@etherworld.co.