Senators Push Treasury to Overhaul Crypto Tax Rules

Treasury should address cryptocurrency tax regulations, say Senators Lummis and Moreno. Current rules tax unrealized gains, hurting U.S. crypto firms. Foreign competitors face fewer tax burdens on digital assets. U.S. senators Cynthia Lummis and Bernie Moreno have written a letter to the Treasury Department demanding that it review the tax rules they allege are unfairly burdening the American cryptocurrency companies. In a letter dated May 12, 2025, senators brought out how the existing regulations disadvantage U.S firms as compared to their foreign counterparts. Addressed to the Secretary of the Treasury, the letter emphasized the necessity for fair tax policies to be implemented to contribute to the development of the emerging digital assets industry. It referred to the CMAT, or Corporate Alternative Minimum Tax, which was established by the Inflation Reduction Act of 2022, which President Biden signed into law. This is a tax that places a floor of 15% on the corporations that have adjusted financial statement income (AFSI) of over $1 billion in three consecutive years. Organisations must disclose the market value of their digital assets in accordance with the regulations laid down by the Financial Accounting Standards Board (FASB). This mark-to-market standard makes firms liable to pay taxes on monies that were not received from the sale of their assets. The senators say this levels the playing field in an unfair way since foreign companies are mostly subjected to less ardent tax obligations. Senators Sound Alarm on Crypto Rule That Could Drain Corporate Reserves Companies are required to declare cryptocurrency holdings by their market value under the new accounting standard, ASU 2023-08. When the value of a firm’s digital assets increases, higher taxes have to be paid even if the assets are not sold. But the firms have the right to deduct the losses if the value drops. Senators are of the opinion that this regulation would be detrimental to American businesses. Foreign competition is not being subjected to tax on unrealized gains, which is a situation that exists under different accounting standards. This will lead to American firms deterring from holding digital assets for long or being compelled to sell their assets prematurely to cover tax bills. The letter explained that the CAMT worsens the problem by taxing unrealized gains, hence lowering the amount of money left to corporations with enormous digital asset holdings. According to it, neither Congress nor FASB intended tax liability to be decided based on what private businesses, such as FASB, decided to write or not to write to people’s accounts. As an answer to this, the senators suggested that the Treasury apply its power under 26 U.S.C. § 56A(c)(15) to adjust AFSI. They recommended excluding unrealized gains and losses from digital assets when calculating the taxes for a corporation. Alternatively, they suggested the adjustment of the definition of AFSI to ignore such gains in whole when the ASU 2023-08 applies. Wider Implications of the Digital Asset Industry The senators underlined the necessity of sustaining the leadership of the U.S. in digital finance. They warned that without changes, the American companies might lose their competitiveness in the global market. The existence of clear and equitable regulations towards the promotion of innovation in the digital asset sector was emphasized in the letter. This drive is consistent with the general change in the taxation of cryptocurrencies. The Internal Revenue Service (IRS) is currently considering putting cryptocurrency in the category of property; hence, capital gains tax is charged on sales or exchanges. Moreover, the Tax Foundation has shed light on international controversy on the digitisation of taxation, which has long-term policy implications. So far, the Treasury Department has failed to make a public response to the letter sent by the two senators. The suggested alterations may alter the conduct of the American cryptocurrency companies significantly, which might promote digital asset investment in the long run. Source: https://www.livebitcoinnews.com/senators-push-treasury-to-overhaul-crypto-tax-rules/