The US Treasury has issued new guidance to clarify that unrealized benefits from digital asset holdings are not subject to the company’s alternative minimum tax (CAMT).
The decision shows a pivot from the Biden-era tax framework, as debates are being raised in Congress about how digital assets are regulated and taxed. Today, there is still a hearing on the Senate Finance Committee on Crypto Tax.
Established in 2022, CAMT imposes a 15% minimum tax on companies that earn more than $1 billion in annual income, based on financial statement income rather than taxable income.
Under the rules of the Financial Accounting Standards Board (FASB), companies must hold “market-to-market” cryptocurrency holdings “market-to-market” in their books, and record paper profits and losses as if the assets were being sold at their current prices.
That accounting triggered an alarm. Unrealized stock increases were excluded from CAMT, but digital assets like Bitcoin were not explicitly exempted.
For businesses such as strategies aimed at holding $1 trillion worth of Bitcoin, this distinction could have been converted to hundreds of billions of annual tax bills on unrealized profits.
The latest guidance from the Treasury removes digital assets from CAMT’s liability and effectively levels the arena between stocks and bonds.
Bitcoin tax easing and industry pushback
This change comes after months of lobbying from the industry’s heavyweights. In May, Strategy and Coinbase submitted a joint letter to the Treasury urging exemptions, claiming that taxing unrealized cryptocurrency interests is unfair, unconstitutional and risks pushing American businesses offshore.
IRS officials seem to take these concerns seriously. This guidance provides regulatory clarity that allows more companies to burn to add more companies to their balance sheets without fear of unpredictable tax shocks.
Lumis: It’s pointless to tax phantom profits
Sen. Cynthia Ramis (R-Wyo.), one of Congress’s most vocal cryptography supporters, welcomed the move as a victory for common sense.
Lummis said in a statement at BTC at the DC event on Tuesday, the ruling would help American companies build Bitcoin finances without the risk of being punished to make healthy money.
Lummis is driving broader tax reforms on digital assets. Her latest bill proposed a DE Minimis exemption, excluding crypto transactions that are less than $300 from taxation, and sought to prevent lending digital assets from being treated as taxable events.
Strategy’s Treasury Playbook
For strategy, the IRS guidance is a massive green light with tax wins to continue expanding the Bitcoin-first corporate strategy.
CEO Michael Saylor has assembled the company’s long-term mission as accumulation of $1 trillion in Bitcoin reserves, placing cryptocurrencies as a superior Treasury asset compared to cash and bonds.
If CAMT was applied to digital assets, the strategy could risk facing hundreds of billions of tax obligations each year, disrupting accumulation strategy.
The exemptions have been secured, allowing Saylor and other Bitcoin Treasury pioneers to operate with less headwinds in regulations.
As mentioned earlier, the Senate Treasury Committee is holding a hearing Wednesday entitled “Investigating the Taxation of Digital Assets.”
The hearing is against the backdrop of the looming government closure deadline, but committee officials confirmed that the crypto tax session will proceed irrelevant.