France Crypto Tax Plan Risks Offshore Shift, Chainalysis Warns

France’s crypto tax proposal could encourage investors to move trading activity outside regulated European platforms, according to Chainalysis. The warning followed lawmakers’ support for taxing conversions into certain stablecoins under the country’s existing capital gains framework.

The National Assembly’s Finance Committee approved the amendment on Oct. 7, proposing implementation from Jan. 1, 2027. However, the measure remains subject to parliamentary approval and has not taken effect.

Other amendments would introduce reporting obligations for large self-hosted wallets and extend existing exit-tax rules to cryptocurrency holdings. Those proposals also remain unresolved.

France Crypto Tax Proposal Targets Regulated Stablecoin Swaps

France generally allows investors to exchange one cryptocurrency for another without immediately paying capital gains tax. Tax usually becomes due when investors convert their holdings into conventional currency or use crypto to purchase goods and services. On October 7, the National Assembly’s finance committee approved an amendment that would change that treatment for some stablecoin transactions.

The measure targets electronic money tokens under the EU’s Markets in Crypto-Assets regulation, known as MiCA. A trader converting Bitcoin or another cryptocurrency into a qualifying stablecoin would face a taxable event, even without withdrawing euros to a bank account. The 31.4% rate would apply to taxable gains rather than the entire value of the swap.

Lawmakers proposed January 1, 2027, as the starting date. Exchanges between other categories of crypto assets would continue to follow the existing rules unless lawmakers adopted further changes. The amendment therefore draws a distinction between regulated electronic money tokens and other digital assets used in trading.

Chainalysis Raises Concerns Over Offshore Trading

François Volpoet, Chainalysis’ chief executive in France, questioned whether the proposal would encourage more investors to declare their transactions. He warned that taxing conversions into regulated stablecoins could push activity toward tokens and trading channels outside the EU framework.

Volpoet said authorities can track transactions involving regulated providers more easily than activity through decentralized finance services or self-hosted wallets. Traders who move away from regulated services may leave authorities with less information about their transactions.

Chainalysis presented the concern as a possible response to the tax proposal, not as an established change in trading patterns.

For traders, the proposed rule would add a tax consideration to the switch from a volatile cryptocurrency to an eligible stablecoin.

Such conversions currently allow holders to change assets without the tax event that generally accompanies cashing out. The amendment would end that treatment for the specified token category.

Other Proposals Cover Wallets and Large Holdings

The finance committee also backed a separate amendment on October 9 addressing self-hosted wallets. French taxpayers with at least €100,000 in crypto held in those wallets would have to declare their holdings. Failure to report could carry fines of up to €10,000 under the proposal.

Volpoet raised security concerns about requiring owners to disclose large crypto balances. He cited physical attacks against crypto holders in France when discussing the risks of collecting more personal financial information.

Another measure would extend France’s exit tax to individuals moving abroad with crypto portfolios exceeding €800,000. The crypto tax applies to unrealized gains and follows the existing tax framework for certain shareholders who change their tax residence. A further amendment would allow investors to carry forward crypto losses for up to 10 years.

French Budget Debate Leaves Tax Changes Uncertain

The finance committee later rejected the revenue section of the government’s 2027 budget by 31 votes to three. As a result, supporters must submit the crypto amendments again during debate in the full National Assembly. Lawmakers plan to vote on the revenue section on October 20.

The proposals remain under consideration, and none has taken effect. France’s wider budget process is due to continue into December. Until lawmakers approve a final measure, traders remain subject to the current tax treatment of crypto exchanges and disposals.

This article is for informational purposes only and does not constitute legal, tax, financial, or investment advice.