TL;DR
- Two U.S. senators, Cynthia Lummis and Bernie Moreno, have urged the Treasury Department to correct a tax provision that could force companies to pay taxes on unrealized gains from crypto assets.
- The tax, part of President Biden’s “Inflation Reduction Act”, unfairly impacts American companies compared to their foreign competitors.
- They propose excluding digital assets from the tax calculation to protect innovation and competitiveness.
At a time when digital asset adoption is growing globally, the United States risks jeopardizing its technological leadership. Senators Cynthia Lummis (Wyoming) and Bernie Moreno (Ohio), both known advocates for the crypto industry, have sent a formal letter to Treasury Secretary Scott Bessent warning of the unintended consequences of the corporate minimum tax included in the “Inflation Reduction Act”. This regulation establishes a 15% minimum tax on corporate profits, calculated based on adjusted accounting income that includes the valuation of digital assets, even if they haven’t been sold.
The problem lies in the fact that many tech and financial companies holding significant amounts of cryptocurrency could be forced to pay taxes on potential gains, threatening their liquidity, reinvestment capacity, and ultimately, their ability to innovate.
Warning of a Slowdown in the Digital Sector
According to the senators, this tax structure creates a “disproportionate barrier” for U.S. companies investing in blockchain technology. Unlike traditional assets, cryptocurrencies are highly volatile, and their book valuation doesn’t always reflect real-world utility or liquidity. This could push companies to sell portions of their holdings just to meet tax obligations, undermining their long-term growth strategies.
Moreno and Lummis propose an immediate solution: for the Treasury to use its regulatory authority to exclude unrealized gains in crypto assets from the calculation of adjusted accounting income. This adjustment doesn’t require changing the law—only reinterpreting it under current criteria, which is entirely legal and feasible.
A Proposal to Level the Global Playing Field
This initiative would not only ease the tax burden on domestic companies but also level the playing field against international competitors who are not subject to the same rules. In a global environment where jurisdictions like Singapore and El Salvador are building crypto-friendly ecosystems, the U.S. cannot afford to scare off investment.
Both lawmakers have demonstrated a strong commitment to financial innovation. Lummis, in particular, is co-author of the “Financial Innovation Act” and has led numerous efforts to provide regulatory clarity to the sector. This proposal comes at a critical time, just as the Senate prepares to vote again on the “GENIUS Act”, which focuses on stablecoin regulation.
