U.S. Senators Cynthia Lummis and Bernie Moreno are calling on the Treasury to exclude unrealized crypto gains from corporate tax calculations under the 2022 Corporate Alternative Minimum Tax (CAMT).
Background
- A new letter from Senators Lummis (R-WY) and Moreno (R-OH) urges Treasury Secretary Scott Bessent to address concerns around the CAMT’s impact on the U.S.-based crypto firms.
- The CAMT, introduced under the Inflation Reduction Act, imposes a 15% minimum tax on companies earning at least $1 billion annually based on their “adjusted financial statement income” (AFSI), not traditional tax figures.
- This calculation now includes unrealized gains from crypto holdings due to a 2023 Financial Accounting Standards Board (FASB) rule (ASU 2023-08) mandating fair-value accounting for digital assets.
- Initially seen as a win for transparency, the change inadvertently ties firms’ tax liabilities to market fluctuations, even when no asset has been sold.
Why should you pay attention?
- Crypto firms may face large tax bills on assets they haven’t sold, potentially leading to forced liquidations.
- Foreign companies, not subject to U.S. GAAP standards avoid these tax consequences, putting U.S. businesses at a disadvantage.
- The situation raises broader concerns over tax fairness, market distortion, and the United States’ competitiveness in the digital asset space.
Who said what?
- Cynthia Lummis, on X:
“Our edge in digital finance is at risk if U.S. companies are taxed more than foreign competitors.”
- Joint letter from Lummis and Moreno:
“Neither Congress nor FASB planned this outcome... This is the unintended result of basing tax liability on decisions by a private organization.”
- The senators warned the Treasury that failure to act swiftly could “disincentivize entities from maintaining large holdings of digital assets.”
- The lawmakers called for interim guidance to exclude unrealized crypto gains or narrow the rule’s application until a broader solution is finalized.
Zooming out
- The pushback comes amid a broader rollback of Biden-era crypto policies under the Trump administration, with recent legislative victories including the repeal of the IRS’s DeFi broker rule.
- Senator Lummis remains a key advocate for pro-crypto regulation, having authored the 2022 Lummis-Gillibrand bill and reintroduced the BITCOIN Act earlier this year.
- With Washington reemerging as a battleground for crypto legislation, the CAMT controversy highlights the delicate balance between taxation, innovation, and regulatory clarity.
- How the Treasury responds could shape not only corporate crypto strategy but also the broader pace of institutional adoption in the U.S. digital asset market.
