The United States stands at a pivotal moment in its approach to cryptocurrency, with Senators Cynthia Lummis and Bernie Moreno pressing Treasury Secretary Scott Bessent to revise a tax provision that they argue stifles innovation in the digital asset sector.
In a detailed letter dated May 12, 2025, the senators called for an amendment to the definition of “adjusted financial statement income” under the Inflation Reduction Act of 2022.
This change would alleviate the tax burden on U.S. corporations holding digital assets, which currently face a 15% minimum tax on profits exceeding $1 billion over three consecutive years, a measure that controversially includes unrealized cryptocurrency gains and losses.
Lummis, a long-time advocate for blockchain technology, warned on May 13 that without reform, “our edge in digital finance is at risk if U.S. companies are taxed more than foreign competitors.”
Moreno, who assumed office in January 2025 after a crypto-backed campaign, echoed her concerns, emphasizing the need for policies that foster growth in this rapidly evolving industry.
Tax Reform Amid a Crypto Boom
The push for tax reform comes as the cryptocurrency market experiences unprecedented growth. As of May 14, 2025, the global crypto market capitalization has soared to $3.4 trillion, with Bitcoin reaching $103,373 per coin, according to CoinMarketCap.
The Inflation Reduction Act, enacted in 2023, has drawn criticism for its broad application to digital assets, which Lummis and Moreno argue disadvantages U.S. firms compared to those in jurisdictions with lighter tax regimes, such as Singapore or Switzerland.
By redefining how corporate crypto holdings are taxed, the senators aim to provide relief to companies investing in blockchain technologies, from decentralized finance (DeFi) platforms to tokenized real-world assets (RWAs).
Their proposal underscores a broader debate about whether current tax frameworks are equipped to handle the unique characteristics of digital assets, such as their volatility and lack of traditional accounting precedents.
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Stablecoin Legislation and Political Tensions
The tax reform initiative aligns with ongoing efforts to regulate digital assets at the federal level. The Senate is gearing up for a second vote on the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a bill co-sponsored by Lummis to establish a regulatory framework for payment stablecoins.
The legislation, which failed to advance on May 8 due to Democratic objections over President Donald Trump’s growing influence in the crypto space, is considered a critical step toward integrating stablecoins into the U.S. financial system.
Stablecoins, which are pegged to assets like the U.S. dollar, accounted for $170 billion in global transaction volume in April 2025, per The Block. Lummis remains optimistic, stating on May 13 that she expects the Senate to reconsider the bill within days, potentially paving the way for clearer rules on stablecoin issuance and oversight.
The political landscape adds complexity to these efforts. Moreno’s election, bolstered by $40 million from crypto-backed political action committees, reflects the industry’s growing clout.
However, Democratic lawmakers remain wary of crypto’s ties to Trump, who has publicly endorsed digital assets as part of his economic agenda. This divide has slowed legislative progress, even as global competitors like the European Union advance their Markets in Crypto-Assets (MiCA) framework, set to fully take effect in 2026.
Did You Know?
The global cryptocurrency market capitalization reached $3.4 trillion in May 2025, driven by Bitcoin’s surge to $103,373 and a 30% rise in Ethereum’s price year-to-date, per CoinMarketCap.
Industry Moves and State-Level Pushback
Recent industry developments highlight the stakes of the senators’ tax reform push. On May 13, stablecoin issuer Tether invested $458.7 million in Bitcoin for Twenty One Capital, a firm preparing to list under the ticker XXI following a merger with Cantor Equity Partners.
This move boosted Twenty One’s Bitcoin holdings to 36,312 BTC, making it the third-largest public company holder behind Strategy (formerly MicroStrategy) and MARA Holdings.
Meanwhile, investment giant VanEck launched VBILL, a tokenized U.S. Treasury fund available on blockchains like Ethereum and Solana, marking traditional finance’s deepening foray into digital assets. The tokenized RWA market, now valued at $6.9 billion for U.S. Treasurys, is second only to private credit, according to RWA.
Yet, not all regions are embracing crypto’s rise. Arizona Governor Katie Hobbs recently vetoed three crypto-related bills, including Senate Bill 1373, which proposed a Digital Assets Strategic Reserve Fund, and Senate Bill 1025, the Arizona Strategic Bitcoin Reserve Act.
Hobbs cited “current volatility in cryptocurrency markets” as a reason for her May 12 vetoes, arguing that general fund dollars should not be exposed to such risks. She also rejected Senate Bill 1024, which would have allowed state agencies to accept crypto payments for taxes and fees.
These decisions contrast with a national trend: 26 states have introduced strategic crypto reserve bills, with 18 currently active, per bitcoinlaws.io. Hobbs’ vetoes underscore the uneven adoption of digital assets across the U.S., even as federal lawmakers push for pro-crypto policies.
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A Defining Moment for U.S. Crypto Policy
The convergence of tax reform, stablecoin legislation, and industry milestones signals a defining moment for U.S. cryptocurrency policy. Lummis and Moreno’s call for Treasury action reflects a broader recognition that outdated tax codes could hinder America’s leadership in digital finance.
As global crypto adoption accelerates, India saw a 97% surge in crypto transactions in 2024, per Chainalysis; the U.S. risks falling behind without swift policy adjustments.
The senators’ proposal, if implemented, could lower barriers for corporate investment in digital assets, encouraging innovation in sectors like DeFi, tokenized securities, and blockchain infrastructure. However, the Treasury’s response remains uncertain, and Bessent has yet to publicly address the letter.
The outcome of the GENIUS Act vote and potential tax reforms will likely shape the U.S. crypto landscape for years to come. For now, advocates like Lummis and Moreno are doubling down on their efforts to ensure the U.S. remains a hub for blockchain innovation, balancing the promise of digital assets with the need for regulatory clarity and economic stability.
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