- A widening gap between U.S. tax policy and digital-asset innovation has triggered urgent calls for change on Capitol Hill.
- Senators Cynthia Lummis and Bernie Moreno say the 15 % Corporate Alternative Minimum Tax (CAMT) could saddle crypto companies with bills on paper-only gains.
- CAMT applies to firms posting average adjusted financial-statement income (AFSI) of at least $1 billion over three years, sweeping many large exchanges and custodians into its net.
- A new FASB rule (ASU 2023-08) forces corporations to mark crypto assets to fair value each quarter, magnifying CAMT exposure.
- Lawmakers want unrealized crypto gains carved out of AFSI to prevent “phantom” taxation and preserve U.S. leadership in digital finance.
- Market betting platforms signal slim odds—around 1 %—that sweeping crypto-tax relief will arrive soon, underscoring the difficulty of reform.
1. Policy Crosswinds in Washington
Momentum in digital-asset development has never been stronger, yet the federal tax code still treats novel technologies through a twentieth-century lens. Senators Cynthia Lummis and Bernie Moreno argue that this disconnect is no longer a nuisance but an existential threat to U.S. competitiveness. They frame the debate in stark terms: either modernize the rules or watch high-growth companies—and the jobs and intellectual property that follow—migrate overseas.
The pair’s latest salvo is a formal letter to Treasury Secretary Scott Bessent urging immediate relief from CAMT’s unintended crypto side-effects. They contend the provision, tucked into the 2022 Inflation Reduction Act, never contemplated balance sheets crammed with volatile tokens. If left unchanged, they warn, companies will be forced to liquidate holdings simply to pay a tax on wealth they have not yet realized in cash.
2. Dissecting CAMT: From Theory to Practice
At its core, CAMT introduces a backstop: corporations reporting more than $1 billion in average AFSI over three years must pay at least 15 % tax, regardless of how many deductions or credits they claim under the regular code. Policymakers designed the rule to curb aggressive tax planning by multinationals, but digital-asset firms unintentionally fall inside the perimeter because token prices can swing wildly, inflating accounting income even in lean years.
Consider a U.S. exchange that bought Bitcoin at $30,000. If the market price spikes to $60,000 on December 31, it must book a $30,000 gain—despite not selling a single satoshi. That mark-to-market jump lifts AFSI, potentially punching through the $1 billion threshold and triggering CAMT. Should prices retreat a month later, the firm might never capture those gains in cash, yet the tax bill would already be due.
3. Accounting Rules Collide With Tax Policy
The stakes rose last year when the Financial Accounting Standards Board finalized ASU 2023-08. The update scrapped the old “impairment only” method and required all corporate crypto holdings to be re-measured at fair value each reporting period. Investors praised the transparency boost, but tax practitioners quickly spotted trouble: every unrealized uptick now flows straight into net income—and, by extension, AFSI.
Because CAMT piggybacks on financial statement numbers, Congress has effectively delegated part of its taxing power to a private-sector accounting board. In calmer markets, the delegation barely matters; in crypto, where double-digit percentage moves in a single day are common, the link can produce a whiplash in taxable income that no CFO can forecast with confidence.
4. Competitive Fallout and Capital Flight
U.S. firms already operate under a heavier regulatory burden than many foreign rivals. Layering CAMT on top threatens to widen that gap. If a Singapore-based exchange pays zero tax on unrealized gains while its San Francisco competitor writes a check to the IRS, global investors will favor the lighter-tax jurisdiction. In the senators’ view, the policy amounts to self-inflicted damage at a time when the United States is fighting to stay ahead in blockchain infrastructure, payment rails, and tokenization research.
Corporate treasuries may respond by trimming strategic crypto reserves or shifting token custody abroad. Both outcomes erode domestic liquidity and diminish the network effects that make U.S. platforms attractive. In the worst case, the cycle becomes self-reinforcing: lower liquidity means lower trading volumes, which then justify further relocation.
5. Legislative Countermoves and Market Skepticism
To blunt the threat, Senator Lummis proposes carving unrealized digital-asset gains out of the AFSI calculation. The adjustment would restore parity with traditional assets such as stocks, which are generally excluded from AFSI until sold. Yet passing standalone tax tweaks in an election year is notoriously difficult, and prediction markets appear unconvinced. Polymarket odds imply only about a one-in-a-hundred chance that the next administration eliminates capital-gains taxes on crypto before June. The data reflect both partisan gridlock and public unease over offering industry-specific breaks.
Still, pro-crypto lawmakers are not sitting idle. Lummis recently re-introduced the BITCOIN Act, which envisions a national reserve of up to one million BTC over five years. Supporters say anchoring a slice of federal assets in Bitcoin would align government interests with the broader crypto economy and demonstrate long-term confidence. Critics counter that such a move could provoke political controversy over asset-allocation priorities.
Conclusion
The collision between CAMT and fair-value accounting has exposed a fault line in U.S. fiscal policy: innovative firms are being taxed on phantom income generated by market swings rather than realized profit. Senators Lummis and Moreno believe the remedy is clear—exclude unrealized crypto gains from AFSI and restore a level playing field. Whether Congress can marshal the votes remains uncertain, but one outcome is assured: without swift clarification, the United States risks ceding its leadership position in digital finance to jurisdictions that better align tax rules with technological reality.