Senators Call for Tax Reform on Digital Asset Corporations
In a recent initiative, two U.S. senators have called upon Treasury Secretary Scott Bessent to leverage his regulatory powers to modify a tax provision that adversely affects corporations managing digital assets. Senators Cynthia Lummis and Bernie Moreno addressed this appeal in a letter sent on May 12, arguing that a revision of the definition of ‘adjusted financial statement income’ under existing tax laws could significantly relieve the tax obligations for companies engaged in the cryptocurrency sector. This proposed adjustment seeks to amend an element of the Inflation Reduction Act, which was introduced in 2022 and came into effect this year.
Concerns Over Domestic Competitiveness
Lummis raised alarms about the implications for domestic digital finance competitiveness, arguing on May 13 via the platform X that U.S. companies risk being taxed more heavily than their international peers. The senators contend that this modification is crucial as it would provide vital tax relief to corporations making investments in digital assets. Lummis has long championed the cause of digital assets in Congress, while Moreno, who was elected in January, has strong backing from pro-crypto political action committees during his 2024 election campaign.
Impact of the Inflation Reduction Act
The Inflation Reduction Act imposes a 15% minimum tax on firms that report profits exceeding $1 billion for three consecutive years, with the calculation including unrealized gains and losses from cryptocurrencies. This prompted the urgent appeal from Lummis and Moreno for the Treasury Department to take immediate action.
Legislative Context and Future Discussions
Additionally, the senators’ request comes at a time when the Senate is preparing to re-examine the GENIUS Act, which aims to establish regulations for payment stablecoins in the U.S. However, discussions surrounding this legislation faced delays on May 8 due to opposition from some Democratic senators. This opposition coincidentally ties back to former President Donald Trump’s affiliations with the crypto market. As a co-sponsor of the GENIUS Act, Lummis remains dedicated to advancing regulations for digital assets, with expectations that the vote will be revisited in the near future.
