Senators Urge Treasury to Ease Digital Asset Tax Burden

Two US senators have urged Treasury Secretary Scott Bessent to modify a provision affecting taxes on corporate holdings of digital assets. In a letter dated May 12, Senators Cynthia Lummis and Bernie Moreno suggested that Bessent has the authority to change the definition of “adjusted financial statement income” under existing US law. This change could potentially reduce the tax burden on digital asset companies. The proposed adjustment aims to modify a provision of the Inflation Reduction Act, which was signed into law in 2022.

According to the senators, the proposed modification would provide “relief to corporations that invest in digital assets.” Lummis has been a vocal advocate for digital assets in Congress, while Moreno took office in January after crypto-backed political action committees spent roughly $40 million to support his 2024 Senate race. The Inflation Reduction Act, which went into effect in 2023, imposes a 15% minimum tax on companies that report more than $1 billion in profits for three consecutive years. This measure seemingly includes unrealized crypto gains and losses, prompting Lummis and Moreno to call for the Treasury Department to “act swiftly.”

The call from the two senators comes as lawmakers in the Senate are expected to consider another vote on the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act — legislation to regulate payment stablecoins in the US. A motion for consideration failed to move forward in the Senate on May 8 due to Democratic lawmakers pushing back on Donald Trump’s ties to the crypto industry. Lummis, one of the bill’s co-sponsors, suggested that she would continue to support digital asset regulation. The Senate could take up another vote in a matter of days.

This push for tax reforms is part of a broader effort to provide regulatory clarity for digital assets. House Republicans have proposed a comprehensive plan to establish a regulatory framework for digital assets, aiming to address the lack of clear guidelines that have hindered the growth of the sector. This initiative aligns with the broader goals of the Trump administration, which has shown a favorable stance towards digital assets, viewing them as a crucial component of innovation and economic development.

The administration's approach to digital assets has been marked by a shift from the previous administration's skeptical views. Trump has emphasized the importance of reducing regulatory overreach to protect American economic liberty and foster a friendly environment for digital assets. This stance is reflected in various executive orders and actions taken by the administration, including the establishment of a digital assets working group and the repeal of certain regulations that were seen as burdensome by the sector.

The push for tax reforms is also part of a larger tax policy agenda being advanced by Republicans in Congress. The administration and Republican leaders have laid the groundwork for a budget reconciliation bill that includes an extension of Tax Cuts and Jobs Act provisions expiring at the end of 2025. This bill aims to provide tax relief and stimulate economic growth, with a focus on reducing the regulatory burden on businesses.

The administration's deregulatory agenda extends beyond digital assets, with a broader push to reduce unnecessary and burdensome federal regulations. This agenda is aimed at fostering economic growth and competitiveness, with a particular focus on reducing the regulatory footprint of federal agencies. The administration has directed agencies to identify and repeal regulations that exceed their authority or have anticompetitive effects, and to prioritize enforcement actions that comply with the law.

The push for tax reforms and regulatory clarity in the digital asset sector is part of a broader effort to position the U.S. as a leader in financial innovation. By providing a favorable regulatory environment and reducing the tax burden on digital asset firms, the administration aims to attract investment and foster growth in the sector. This approach is seen as a way to enhance the U.S.'s competitiveness in the global financial landscape and promote economic development.