France Moves to Impose 31.4% Tax on Stablecoin Conversions

French lawmakers have taken a significant step toward tightening crypto taxation. According to a report by Journal du Coin, the National Assembly passed Amendment I-3898 to the 2027 budget bill on October 16. The amendment proposes applying a flat-rate capital gains tax of 31.4% to transactions where crypto assets are converted into electronic money tokens (EMTs) as defined under the EU's Markets in Crypto-Assets (MiCA) regulation, with the rule slated to take effect from January 1, 2027.

Key Provision: A Shift in Taxable Events

The central change lies in defining the act of swapping a crypto asset for a MiCA-compliant stablecoin as a taxable event for capital gains. This means profits realized from selling Bitcoin or Ethereum to purchase such stablecoins would be subject to tax.

Notably, the tax liability is triggered even if the proceeds are not converted into traditional fiat currency like euros. This closes a common loophole where investors used stablecoins as an intermediate holding to defer tax obligations.

Scope and Notable Exceptions

The tax would apply to conversions involving EMTs under MiCA, which typically include fiat-pegged stablecoins. The report specifies that stablecoins like USDC and EURC would fall within the scope of the measure.

However, analysis cited from Chainalysis suggests that Tether (USDT), the largest stablecoin by market cap, may not be covered. This potential exclusion is likely due to differences in its issuer structure or compliance status compared to the MiCA definition for EMTs. Such a distinction could lead to significant market distortions if the proposal becomes law.

Legislative Journey and Broader Implications

It is crucial to note that this is an amendment passed at the National Assembly stage. It must still navigate the full budget vote process and undergo review by the French Senate before being enacted, leaving room for modifications.

Nevertheless, the proposal signals a hardening stance. As a major EU economy, France's policy moves are closely watched. This initiative to tax stablecoin conversions could encourage other EU states to reevaluate their crypto tax regimes, especially as MiCA implementation nears. For crypto holders and exchanges, understanding and preparing for these potential changes is becoming increasingly important.