Senators Urge Treasury to Fix Crypto Tax Rules on Unrealized Gains

Highlights:

• Senators have asked the United States to stop taxing crypto gains that firms have not yet received through actual sales.
• They warn that the current crypto tax rules might push firms to move their operations to other countries.
• The law taxes companies when they have not sold or used the assets they have for profit.

US Senators Cynthia Lummis and Bernie Moreno have presented a proposal to the US Treasury. The proposal wants to fix how digital assets are taxed under the Corporate Alternative Minimum Tax. The tax was created under the 2022 Inflation Reduction Act. In particular, the corporate tax applies a 15% minimum tax to companies with at least $1 billion in average adjusted financial statement income over a three-year period.

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Our edge in digital finance is at risk if U.S. companies are taxed more than foreign competitors. @berniemoreno & I urged the @USTreasury to lift an unintended tax burden on U.S. digital asset companies. To lead the world in digital assets, we need a level playing field.⬇️ pic.twitter.com/V7pwAUqRc4

— Senator Cynthia Lummis (@SenLummis) May 13, 2025

The Financial Accounting Standards Board (FASB) issued a rule that companies should report their digital assets according to the fair market value after the corporate tax was established. The FASB requires firms to record the market price of digital assets such as Bitcoin and Ethereum after every quarter in the year. Companies are required to report losses on their balance sheets and also show gains as income. They have to report even if they do not sell the assets.

The crypto tax rule has complicated the process when it is combined with the corporate tax rule. The complication is mostly seen when firms are taxed on gains they have not realized. These gains exist only on paper. However, the gains do not reflect any actual profit for the companies.

Senators Urge Treasury to Move to Prevent Sale of Assets

Senators Lummis and Moreno sent the letter, addressed to Scott Bessent, the Secretary to the Treasury. The senators asked him to make the necessary changes before companies start moving. They requested the secretary to omit the unrealized gains and losses achieved from crypto from the calculations. The gains and losses are calculated from the adjusted financial statement income required by the Corporate Alternative Minimum Tax. The senators argue that section 56A of the tax code gives the Treasury the authority to make the necessary changes. 

The duo believe that taxing gains will prevent firms from investing in or holding digital assets. The senators warn that this strategy may cause the firms to relocate to other countries due to the crypto tax rules. The international accounting regulations do not require companies to report fair value for digital assets. This puts overseas companies at a competitive advantage over companies that are based in the United States.

They added that domestic businesses are already managing market risks related to movements in the price of cryptocurrencies. The senators argue that the companies should not also face tax bills unrelated to real income. 

IRS Developments Add to Industry Uncertainty on Crypto Tax Rules

The Internal Revenue Service recently acknowledged that similar concerns about crypto tax rules  have been raised when it released a notice that offered temporary relief to the insurance sector under the same tax system.  Senators Lummis and Moreno stressed that the Treasury should address the uncertainty on the capital gains. They believe the Treasury should act fast and not fine companies for choosing to go digital. Moreover, they are calling for the financial sector to be treated uniformly.

Recently, President Donald Trump also signed a resolution to scrap an Internal Revenue Service rule in April. This rule would have compelled decentralized finance (DeFi) to report a total crypto sale by users as well as collect the users’ data for the tax agency.

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