French tax on regulated stablecoins could push crypto traders offshore

Chainalysis France CEO François Wolpuet warns that the proposed 31.4% tax on regulated stablecoins could drive traders toward unsupervised offshore channels.

French lawmakers have tabled a new proposal to expand the 31.4 percent crypto capital gains tax to include transactions involving European Union (EU)-regulated stablecoins, a move Chanalysis warns could push investors into stablecoins outside the bloc's rules.

The proposal is part of France's 2027 budget, which lawmakers began debating in the National Assembly last week and have until December 10 to approve.

An amendment approved by the National Assembly's finance committee on October 7 would make it a taxable event when investors exchange cryptocurrencies such as bitcoin for stablecoins classified as electronic money tokens under the EU's MiCA regulation, which came into full force on July 1.

The exchange of one cryptocurrency for another generally does not trigger capital gains tax in France. The proposed changes would tax exchanges to some EU-regulated stablecoins from January 1, 2027. France currently imposes a flat tax of 31.4% on crypto profits when investors cash out or spend their holdings.

This distinction is important because the proposal targets a category of stablecoins that are subject to EU rules, potentially encouraging traders to use alternatives outside of that category.

Francois Volpot, CEO of Chainalysis in France, warned that the move could undermine efforts to bring more cryptocurrency transactions into the regulated financial system.

"Do we want more taxpayers to declare their assets or a higher tax rate for foundations that are increasingly fleeing?" Volpoet said in an email to CoinDesk. Authorities can more easily monitor regulated stablecoin transactions than transactions via decentralized finance (DeFi) platforms or self-hosted wallets.

Another amendment backed by the finance committee on October 9 would require French taxpayers to declare self-hosted crypto wallets with at least €100,000 (roughly $116,000) in assets, with fines of up to $11,600 for non-compliance.

Citing an increase in physical attacks targeting crypto holders in France, Volpoet raised concerns about the security of such disclosures. Since July, Europe has recorded 39 of the 52 global incidents, with France alone responsible for 33 incidents, or 63.5% of all incidents worldwide.

Lawmakers also backed a proposal to extend France's exit tax on cryptocurrency assets worth roughly $900,000. The move would result in unrealized cryptocurrency gains based on tax rules already in place for wealthy shareholders who move abroad.

A separate amendment approved on October 7 would allow investors to carry cryptocurrency losses forward for up to 10 years, bringing their tax treatment closer to that of stocks.

The Finance Committee subsequently rejected the revenue section of the government's 2027 budget by 31 votes to 3, meaning that the crypto reforms must be tabled again for debate in the National Assembly. Lawmakers are scheduled to vote on the revenue section on Oct. 20.

None of the measures have yet become law.

France's plans to extend the tax on crypto come as Greece has taken the opposite direction. Greece is preparing to impose a 10 percent capital gains tax (CGT) on cryptocurrencies, according to a draft bill released for public consultation last week. The 10% tax puts Greece among the EU countries with the lowest crypto taxes. Germany, France and Italy are setting or planning to set capital gains above 25%.

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