Lummis vs. Treasury: The Hidden Fight to Stop $1B Crypto Firms From Fleeing America

Senators urge Treasury to exempt unrealized crypto gains from CAMT, fearing forced asset sales and offshore migration.CAMT’s 15% tax on $1B+ firms includes paper gains, risking U.S. crypto competitiveness, per Lummis and Moreno.U.S. Senators Cynthia Lummis and Bernie Moreno are urging the Treasury Department to revise tax rules they argue could impose undue burdens on cryptocurrency firms. In a letter to Treasury Secretary Scott Bessent, the lawmakers highlighted concerns that the Corporate Alternative Minimum Tax (CAMT) may force companies to pay taxes on paper gains from digital assets, even if those assets have not been sold.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, 2025The CAMT, enacted under the Biden administration, applies a 15% minimum tax on corporations with average annual financial statement income exceeding $1 billion over three years. For crypto firms, this income calculation includes unrealized gains—increases in asset values that have not been converted to cash through sales. The rule aligns with accounting standard ASU 2023-08, which requires companies to report digital assets at current market values.The issue arises due to a new accounting standard issued by the Financial Accounting Standards Board (FASB), which requires companies to report the fair value (or “mark-to-market”) of their digital assets, like Bitcoin, even if they haven’t sold them.This means that unrealized gains (i.e., the increase in Bitcoin’s value that hasn’t yet been converted to cash) are included in the company’s financial statements and, therefore, are subject to the CAMT. This creates an additional tax burden for U.S. companies investing in Bitcoin or other digital assets, putting them at a disadvantage compared to foreign competitors who don’t face this type of tax on unrealized gains.Lummis and Moreno contend that combining these rules creates a mismatch between tax obligations and actual liquidity.“Corporations might need to sell assets just to cover tax bills, discouraging them from holding digital assets long-term,” they wrote.The senators called for an exemption for unrealized crypto gains under CAMT, arguing current policy disadvantages U.S. firms compared to overseas competitors.“To lead in digital finance, we need fair tax treatment,” Lummis stated on social media, emphasizing the need for a “level playing field.” Their push follows the reintroduction of Lummis’ BITCOIN Act, which proposes building a national Bitcoin reserve and authorizing the Treasury to acquire up to one million BTC. However, prediction markets like Polymarket assign only a 1% chance to major crypto tax reforms before June, reflecting skepticism about near-term legislative changes.The comments in X show strong support for the senators’ ideas but also expand the demands:Elimination of Capital Gains Taxes: Users call for the removal of capital gains taxes for retail investors as well, not just for corporations. This indicates that the Bitcoin community wants even more favorable tax treatment, comparing Bitcoin to gold, which doesn’t face double taxation.Self-Custody Rights: Another user mentions the need for clarity on self-custody rights, suggesting that the Bitcoin community is also concerned about other regulations that could affect their freedom to hold and manage Bitcoin without government intervention.Possible OutcomesIf the Treasury Acts: If the Treasury Department follows the recommendations and adjusts the CAMT rules to exclude unrealized Bitcoin gains, this would be a significant win for the crypto industry in the U.S. It could encourage more companies to adopt Bitcoin, potentially increasing its price and legitimacy.If No Action is Taken: U.S. companies would continue to face a disproportionate tax burden, which could slow Bitcoin adoption by corporations and lead some to seek more favorable jurisdictions to operate in, weakening the U.S.’s position in the global digital asset market.Accounting Rules and Unintended ConsequencesWhile the Financial Accounting Standards Board’s ASU 2023-08 aims to increase transparency, its interaction with CAMT has drawn criticism. The senators noted that FASB, a private entity, did not design its standards for tax purposes. “Basing tax liability on these rules was never Congress’ intent,” they added, warning of unintended pressures on innovation. Senator Lummis says the time has come for The #Bitcoin Act to buy 1 million BTC pic.twitter.com/BQG0DqLEoI— Maestro (@GoMaestroOrg) May 14, 2025ETHNews analysts warn that without adjustments, CAMT could drive crypto firms to relocate to jurisdictions with friendlier tax policies. This exodus might weaken the U.S.’s position in the global digital asset sector, particularly as countries like Singapore and Switzerland refine crypto-friendly regulations.The post Lummis vs. Treasury: The Hidden Fight to Stop $1B Crypto Firms From Fleeing America appeared first on ETHNews.