France Votes to Tax Crypto Swaps to Stablecoins Under MiCA Regulations
French lawmakers have approved a tax on gains from crypto swaps into stablecoins, while rejecting a carryforward option for losses.
In a recent legislative decision, French lawmakers have endorsed a tax on profits generated from swapping cryptocurrencies into stablecoins. This decision, taken on October 16, was part of discussions regarding the 2027 finance bill in the National Assembly, where a closely contested vote led to a narrow passage.
Key Votes and Rejections
The proposal, referred to as Amendment I-3898, was approved by a slim margin of 38 to 37 votes, with 25 members abstaining. On the same day, lawmakers voted against another proposal, Amendment I-3653, which would have allowed investors to carry their crypto losses forward for a duration of ten years. This rejection occurred with a significant majority, where the vote tallied 75 in favor of rejection against only 18 supporting the measure.
Understanding the New Tax on Stablecoin Swaps
The newly approved tax will impact private investors who exchange one cryptocurrency for another, particularly when those transactions involve MiCA (Markets in Crypto-Assets) compliant e-money tokens. Currently, traders are exempt from immediate taxation when they swap assets without withdrawing cash. However, the new regulation will eliminate this tax deferral for swaps into stablecoins, meaning investors may have to pay taxes on unliquidated gains, even if the profits remain within the cryptocurrency sphere.
The MiCA regulation characterizes e-money tokens as digital assets designed to maintain a stable value linked to fiat currencies like the euro or the US dollar. Hence, if an investor exchanges appreciated assets like Bitcoin or Ethereum for a stablecoin, they may incur a tax liability on the capital gains realized during the swap.
Tax Calculation Changes
With the implementation of this rule, the way costs are calculated will see a shift. Investors will no longer be able to average their cost basis across an entire portfolio. Instead, the cost basis will be assigned to individual assets based on the weighted average price of purchased tokens. This resets the cost basis for newly acquired assets resulting from a taxable swap.
For those who held their assets before the new regulations come into effect in 2027, they can use their documented purchase costs. Investors will also have the option to elect to use a portfolio-wide cost average based on values from the end of the previous year.
Impact of the Rejected Loss Carryforward Proposal
The failed I-3653 proposal aimed to provide flexibility for traders by allowing them to carry forward unused crypto losses for ten years. Under the current regime, investors can offset losses against gains within the same tax year, but cannot transfer these losses to future years or apply them to gains from different asset categories. This rejection creates further complexities for investors, as in situations where they experience a net loss from prior years, such losses won't be applicable against future taxable gains from stablecoin swaps.
At the time of this reporting, Bitcoin was valued at approximately $81,333, showing a slight decline, while Ethereum hovered around $2,381. The financial budget, in its early stages, includes these new provisions, with the proposed initiation date for the crypto swap tax set for January 1, 2027, contingent on the successful passage of the budget into law.
