France Proposal Would Tax Bitcoin-USDC Swaps Before Cash

France’s National Assembly Finance Committee approved amendment I-CF1826 on Oct. 7 as part of a proposal to change how private crypto gains are calculated. The rules would apply from Jan. 1, 2027, if enacted. The 2027 budget dossier schedules debate in the National Assembly’s plenary session for Oct. 13.

French tax guidance currently defers tax on crypto-to-crypto exchanges when no cash balancing payment is involved. Tax generally applies when crypto is exchanged for fiat currency or used to buy goods or services, subject to the rules for private disposals.

I-CF1826 would end that deferral when the asset received is an electronic money token, or a related right, under the European Union’s Markets in Crypto-Assets regulation. The definition covers a crypto-asset designed to keep a stable value by referring to one official currency.

Circle’s European white paper identifies native USDC as an electronic money token under that provision. A Bitcoin-to-USDC swap could therefore become taxable when it occurs, even if the USDC remains in a crypto wallet or exchange account.

The gain would be calculated by subtracting the tax basis of the Bitcoin sold from the euro value of the USDC received. The amendment’s sponsors describe the current deferral for conversions into fiat-backed stablecoins as a loophole.

The proposal would replace France’s current portfolio-based basis calculation for new taxable disposals. Under the existing method, part of the acquisition cost of an investor’s entire crypto portfolio is allocated to each taxable sale. The proposed rules would focus on the assets sold and use a weighted-average acquisition cost when assets of the same type were bought at different prices.

Investors holding crypto before 2027 would have two options. They could use documented acquisition costs under the proposed rules. Or they could allocate the portfolio acquisition cost calculated under the current rules at Dec. 31, 2026, among the assets held on that date according to their market values.

The selected method would be irrevocable for the entire portfolio when the investor files the first tax return reporting a taxable disposal after Jan. 1, 2027.

For example, Bitcoin bought for €20,000 and worth €60,000 at the transition date could be held with Ether bought for €40,000 and still worth €40,000. The portfolio’s acquisition cost under the current rules would be €60,000. The allocation method would assign €36,000 of basis to Bitcoin and €24,000 to Ether. Using documented costs would leave the bases at €20,000 and €40,000.

A Bitcoin-to-USDC swap valued at €60,000 would produce a €40,000 gain using documented costs or a €24,000 gain using the allocation method. The USDC would receive a €60,000 basis. A later disposal at the same euro value would generate no additional gain.

The proposal distinguishes taxable exchanges from exchanges that retain deferral. In a deferred exchange, the received asset carries the basis of the asset surrendered. In a taxable exchange, the received asset generally receives a basis equal to the value used to calculate the gain, adjusted for any cash payment.

The amendment would not change the existing treatment of crypto losses. Gains and losses can offset within the same tax year, according to the French tax authority. A net crypto loss cannot be carried into future years or used to offset gains from other types of assets. A loss recognized in one year therefore could not offset a later gain in a different year.