Senators Urge Treasury to Rethink Tax on Unrealized Crypto Gains

Pro-crypto lawmakers have demanded immediate action to stop a Biden-era tax policy that is putting U.S. crypto firms at risk of paying millions in taxes on profits they haven’t even realized.In a joint letter sent Tuesday to Treasury Secretary Scott Bessent, Senators Cynthia Lummis (R-WY) and Bernie Moreno (R-OH) called for a reexamination of how the 2022 Corporate Alternative Minimum Tax (CAMT) applies to digital asset holdings. The two lawmakers warned that the recent convergence of tax law and updated accounting rules “undermines fairness, distorts markets, and penalizes U.S. companies for adopting innovative financial strategies.”“Our edge in digital finance is at risk if U.S. companies are taxed more than foreign competitors,” Lummis The CAMT, enacted under the Inflation Reduction Act, applies a 15% minimum tax on a company’s “adjusted financial statement income” (AFSI) for firms averaging $1 billion or more in annual earnings. That income is based on financial statements prepared using Generally Accepted Accounting Principles (GAAP), rather than traditional tax rules. The approach was intended to close loopholes exploited by highly profitable corporations that paid little or no federal tax.But in December 2023, the Financial Accounting Standards Board (FASB) issued This change, initially celebrated as a win for transparency and crypto adoption, now means unrealized crypto gains are counted toward taxable income under CAMT.“Neither Congress nor FASB planned this outcome,” the senators wrote. “It’s the unintended result of basing tax liability on decisions by a private organization… not principles of taxation.”The senators urged Treasury to exclude unrealized crypto gains from tax calculations, either across the board or specifically those triggered by the new accounting rule requiring companies to report the market value of digital assets they haven’t sold.Lummis and Moreno warned that the current policy may force firms to liquidate crypto assets just to meet tax obligations. Foreign firms, which follow different accounting standards, are unaffected, raising concerns over a widening competitive gap.“We respectfully urge Treasury to act swiftly,” the senators wrote. “Failure to provide this clarity… will disincentivize entities from maintaining large holdings of digital assets.”The Senators have called on the Treasury to issue interim guidance before finalizing the rule, saying that prompt action would prevent a misguided tax policy from taking hold. Lummis and Moreno said they were ready to work with Treasury officials directly on this issue.The senators’ warning follows a series of decisive moves in Washington under President Donald Trump to unwind Biden-era crypto regulations and reposition the U.S. as a hub for digital asset innovation.In March, the Senate That rule, finalized during President Biden’s final weeks in office, was heavily criticized by industry groups for being unworkable and invasive.In April, President Trump Meanwhile, Senator Lummis has emerged as a key legislative figure in the crypto space. She has backed crypto through earlier bipartisan efforts, including the 2022 Lummis-Gillibrand Responsible Financial Innovation Act, which proposed a full regulatory framework for digital assets. Though that bill stalled, it laid the groundwork for much of today’s congressional momentum around crypto legislation.In March, she Edited by