A group of Republican senators, led by Senator Cynthia Lummis, has launched a campaign against a new tax regime that they say could seriously harm U.S. companies dealing with digital assets. They are urgently calling for a revision of the law that could force companies to pay taxes on unrealized gains—profits they haven’t actually received.

🔹 What’s the issue?

On May 12, 2025, Senator Lummis and fellow Republicans officially petitioned the U.S. Department of the Treasury to revise how the Corporate Alternative Minimum Tax (CAMT) applies to firms dealing in digital assets. This tax framework was introduced as part of the Inflation Reduction Act signed by President Biden in 2022.

The core problem? Digital assets are now required to be reported at fair market value, thanks to accounting standard ASU 2023-08. This directly affects the calculation of the Adjusted Financial Statement Income (AFSI), which could lead to companies being taxed on “paper” profits.

📉 Taxing phantom profits? Firms may be forced to sell assets

In a letter to Treasury Secretary Scott Bessent, the senators warn that the new accounting rules could force companies to sell their digital assets just to cover taxes on unrealized gains. According to them, this situation could:

🔹 Stifle innovation,

🔹 Discourage investment,

🔹 Undermine U.S. competitiveness against foreign firms.

Foreign competitors often aren’t required to mark digital holdings to market, sparing them from similar tax pressure.

🧾 How CAMT works

The Corporate Alternative Minimum Tax (CAMT) applies to corporations with an average adjusted income of at least $1 billion over the past three years. But with market fluctuations in digital assets now influencing AFSI, companies could face a distorted picture of their real financial condition.

This leads to a fundamental problem: accounting standards were never intended for tax purposes, yet they now have a direct impact on corporate tax liabilities. Senator Lummis calls this “a textbook case of regulatory overreach with unintended consequences.”

🛠️ What are Republicans proposing?

The senators are offering clear solutions to fix the issue:

🔹 Exclude unrealized gains from digital assets from the AFSI calculation.

🔹 Create a targeted exemption for the ASU 2023-08 standard.

🔹 Use the IRS’s 2023 precedent (Notice 2023-20), which granted temporary relief to insurance companies under CAMT.

The letter stresses that this isn’t about giving the crypto industry special treatment, but about restoring fairness and market functionality.

🧠 Economic logic and fairness

“We are not asking for special treatment,” the letter states. “We are asking for equal footing and to prevent tax policy from becoming a barrier to technological progress.”

The senators warn that without prompt action, the U.S. could lose its leadership in the emerging global digital finance era.

🌐 One-Minute Summary:

Senator Lummis is pushing back against taxes on unrealized crypto gains that could force U.S. companies to sell assets just to pay tax bills. Republicans demand a change to CAMT rules to prevent stifling innovation and help preserve America’s leadership in the digital economy.

#cryptonews , #DigitalAssets , #CryptoRegulation , #blockchaineconomy , #crypto


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