French lawmakers have voted narrowly to advance a proposal that would impose a 31.4% capital gains tax on profits made when investors exchange cryptocurrency for qualifying stablecoins. The move could significantly alter the tax treatment of digital asset transactions in France.

The National Assembly approved amendment I-3898 to the 2027 budget on October 16, with 38 votes in favor, 37 against, and 25 abstentions. The proposal had previously been endorsed by the assembly’s finance committee.

The measure is intended to take effect on January 1, 2027, although it must still pass the remaining parliamentary stages. Lawmakers could amend or remove the provision before the budget becomes law.

Under existing French rules, crypto-to-crypto exchanges generally benefit from deferred taxation when no additional cash payment is involved. Private investment gains are normally subject to a 31.4% tax rate, while taxpayers may alternatively choose the progressive income-tax system.

If approved, the amendment would eliminate this deferral for electronic money tokens covered by the European Union’s Markets in Crypto-Assets (MiCA) framework, including qualifying stablecoins.

This means investors could incur capital gains tax when converting cryptocurrency into eligible stablecoins, even if they do not withdraw the proceeds into fiat currency or move the funds into a traditional bank account.

The proposed change has raised concerns about its potential impact on the French crypto market. Francois Volpoet, Chainalysis’ regional sales director for France, told CoinDesk last week that investors could respond by shifting toward decentralized finance platforms, peer-to-peer transactions, or offshore exchanges operating outside international tax-reporting arrangements.

Public Accounts Minister David Amiel questioned whether the proposed system could be effectively implemented and urged lawmakers to withdraw the amendment. He indicated that he would oppose it if it remained in the bill.

“We first need to define stablecoins, then ensure our ability to monitor and trace reallocations within a portfolio of assets,” Amiel said during the parliamentary debate.

Philippe Juvin, the finance committee’s rapporteur general, also favored preserving the current tax deferral, arguing that cryptocurrency market volatility supports retaining the existing approach.

The amendment would also revise the way capital gains are calculated. Rather than determining gains across an investor’s entire portfolio, the proposed system would calculate profits based on the acquisition cost of the assets sold. For units of the same cryptocurrency purchased at different prices, a weighted-average cost would be used to establish the taxable gain.