US Lawmakers Push Back on Unrealized Crypto Gains Tax

By: Eliza Bennet

The debate around taxing unrealized crypto gains for US firms has reached new heights, with proactive steps being sought by US lawmakers. Senators Cynthia Lummis and Bernie Moreno have spearheaded this effort by issuing a letter to Treasury Secretary Scott Bessent, urging a change in the definition affecting digital asset taxes. This move aims to prevent US companies from being disadvantaged compared to their international counterparts due to the Corporate Alternative Minimum Tax (CAMT) interpretation.

In their correspondence dated May 12, the senators emphasized the necessity of excluding unrealized gains on digital assets from the calculation of Adjusted Financial Statement Income (AFSI) under CAMT. They warned of the unintended consequences of current regulations, which could compel corporations to liquidate assets to fulfill tax responsibilities or curtail their crypto holdings, thereby undermining their global competitiveness.

This issue arises from the interplay between CAMT in the Inflation Reduction Act and recent accounting adjustments by the Financial Accounting Standards Board (FASB), which inadvertently subject companies with an AFSI exceeding $1 billion to taxation on unrealized gains. Lummis and Moreno argued that neither Congress nor FASB intended to tax unrealized gains in this manner, advocating for the Treasury's guidance to rectify this oversight.

Beyond regulatory clarification, broader discomfort persists within the crypto sector over stalled legislative progress in Senate and Congress concerning crypto and stablecoin-related bills. A plea for swift legislative action was encapsulated in a public statement by the Cedar Innovation Foundation, a critical component of the crypto-focused PAC Fairshake. The foundation's spokesman highlighted that delayed legislation could jeopardize American competitiveness and consumer interests. They urged Senate leadership to expedite the passing of stablecoin legislation and lay the groundwork for a robust and clear regulatory environment for digital assets in the US.