As crypto regulation continues to spark debate across the United States, federal and state lawmakers are taking markedly different approaches. In Washington, Senators Cynthia Lummis and Bernie Moreno are urging the Treasury Department to revise how corporate crypto holdings are taxed under the Inflation Reduction Act, arguing it could unfairly penalize US companies. Meanwhile in Arizona, Governor Katie Hobbs has vetoed multiple bills that would have expanded the state’s role in digital asset investment, instead opting for a consumer protection-focused law targeting Bitcoin ATMs.
US Senators Urge Treasury to Revise Crypto Tax Rule as Stablecoin Bill Hangs in Balance
Two US senators are ramping up pressure on Treasury Secretary Scott Bessent to revise a controversial tax provision that could significantly impact companies holding digital assets. In a letter dated May 12, Senators Cynthia Lummis (R-WY) and Bernie Moreno (R-OH) urged the Treasury Department to modify how corporate crypto holdings are taxed under the Inflation Reduction Act — a move they argue is crucial for preserving America's edge in the rapidly evolving digital finance sector.
A Push to Reinterpret Corporate Tax Rules for Crypto
The core of the senators’ request revolves around the definition of “adjusted financial statement income,” which plays a pivotal role in determining tax liability under the Inflation Reduction Act (IRA), signed into law in 2022 and enacted in 2023.
The IRA introduced a 15% minimum corporate tax for firms posting profits above $1 billion for three consecutive years. According to Lummis and Moreno, the current interpretation of this provision could result in companies being taxed on unrealized gains in digital assets — a move they claim is both unfair and economically damaging.
“Our edge in digital finance is at risk if US companies are taxed more than foreign competitors,” Lummis said in a May 13 post on X, echoing a growing sentiment among pro-crypto lawmakers that current tax policy is stifling innovation and driving business overseas.
In their letter, the senators urged Bessent to act within the Treasury’s authority to revise the definition without requiring new legislation. The move could provide immediate relief to crypto-focused companies and corporations that allocate a portion of their treasuries to digital assets like Bitcoin and Ethereum.
The appeal from Lummis and Moreno comes at a time when crypto policy is becoming increasingly entwined with US politics. Moreno, a freshman senator backed heavily by crypto-aligned political action committees in the 2024 election, has joined Lummis as a vocal supporter of blockchain innovation and regulatory clarity. His election was buoyed by roughly $40 million in crypto PAC funding, signaling the sector’s growing influence in Washington.
The letter also follows recent moves by other US states and lawmakers to either advance or restrict crypto activity. In Arizona, Governor Katie Hobbs recently vetoed two pro-crypto bills while approving strict regulation of Bitcoin ATMs, showcasing the fragmented regulatory environment across states.
Stablecoin Regulation at a Standstill
The call for tax relief also coincides with ongoing legislative efforts to regulate stablecoins at the federal level. The Guiding and Establishing National Innovation for US Stablecoins Act — or GENIUS Act — remains stalled in the Senate after a failed motion on May 8. Democratic opposition, partly driven by concerns over former President Donald Trump’s crypto affiliations, blocked the bill’s advancement, despite bipartisan support.
Senator Lummis, a co-sponsor of the GENIUS Act, said she remains committed to its passage, emphasizing the importance of regulatory frameworks that foster innovation while protecting consumers. The bill is expected to be reintroduced for a vote in the coming days, though its fate remains uncertain amid continued partisan division.
If the Treasury accepts the senators’ recommendation, the change could be a watershed moment for corporate crypto adoption in the US, potentially removing a significant tax burden and encouraging more Fortune 500 companies to allocate capital to digital assets.
Conversely, failure to act could accelerate the offshoring of crypto businesses to more favorable jurisdictions, a trend already evident as firms seek clarity and cost efficiency outside of US borders.
With the 2024 presidential election season still echoing into 2025 and Congress deeply divided on crypto’s future, the next few weeks may prove pivotal. Whether it’s reinterpreting a tax provision or passing long-awaited stablecoin legislation, the direction taken by US lawmakers and regulators will likely shape the country’s digital asset landscape for years to come.
Arizona Governor Vetoes Key Crypto Bills but Signs Tough Bitcoin ATM Regulation
Meanwhile, Arizona Governor Katie Hobbs has drawn a firm line on the state’s approach to cryptocurrency regulation, vetoing two high-profile bills aimed at expanding Arizona’s involvement in digital assets, while signing a strict consumer protection bill targeting Bitcoin ATM operations.
The decisions, made over the course of May, mark a mixed message from Hobbs’ administration — simultaneously curbing bold state-level crypto adoption plans while tightening oversight on retail access points.
On May 12, Governor Hobbs vetoed Senate Bill 1373, which would have established a Digital Assets Strategic Reserve Fund. The fund was designed to allow Arizona to hold cryptocurrencies acquired through state seizures or legislative allocations. In her veto letter, Hobbs cited the market's inherent instability as a primary reason for rejecting the bill.
“Current volatility in cryptocurrency markets does not make a prudent fit for general fund dollars,” she wrote, adding that existing legislation already allows the state to utilize digital assets without putting taxpayer money at risk.
Just days earlier, on May 3, Hobbs rejected Senate Bill 1025, titled the Arizona Strategic Bitcoin Reserve Act. That more aggressive proposal sought to authorize the state to invest up to 10% of its treasury and retirement funds in Bitcoin and other digital assets — a move that would have positioned Arizona as one of the most crypto-forward states in the US.
Also denied was Senate Bill 1024, which would have allowed Arizona state agencies to accept cryptocurrencies as payment for taxes, fines, and fees through vetted service providers. Despite the bill’s structure insulating the state from direct exposure to crypto volatility, Hobbs maintained it presented “too much risk.”
These decisions come amid a broader national trend. According to bitcoinlaws.io, 26 US states have introduced legislation proposing strategic crypto reserves, and 18 of those efforts remain active. Arizona's withdrawals signal a more cautious route, contrasting sharply with lawmakers and governors in states like Texas and Wyoming, where crypto adoption is accelerating.
States and their strategic Bitcoin reserves (Source: Bitcoinlaws)
Hobbs Signs Tough Bitcoin ATM Law
In contrast to her vetoes, Hobbs approved House Bill 2387 on May 12, marking a significant regulatory expansion targeting cryptocurrency kiosks — commonly known as Bitcoin ATMs.
The law introduces several key consumer protection measures:
Mandatory multilingual warnings about crypto scams displayed on kiosks
Required user acknowledgement of risks before transactions
Itemized receipts including transaction data, contact info, fees, and refund policies
Daily transaction limits: $2,000 for new customers; $10,500 for returning users after 10 days
24/7 toll-free customer service with contact numbers posted clearly on all machines
Full refunds for fraud victims who report the scam within 30 days and provide proof
The new regulation aims to curb rising fraud linked to Bitcoin ATMs, which have gained popularity in low-income and immigrant communities. Arizona currently hosts around 20 active crypto ATMs, according to CoinATMRadar.
Despite her recent vetoes, Governor Hobbs has not completely closed the door on digital asset integration within the state. On May 14, she signed House Bill 2749, which updates Arizona’s unclaimed property statutes to reflect the growing presence of digital assets.
The bill allows the state to retain unclaimed cryptocurrencies in their original digital form, rather than converting them to fiat upon seizure — a forward-thinking measure that aligns with evolving norms in asset custody.
This decision reflects a more moderate stance, acknowledging digital assets as a legitimate form of property while keeping speculative exposure at arm’s length.
A Measured Path Amid a Divided National Landscape
Governor Hobbs’ approach reflects a growing political fault line over cryptocurrency adoption. On one side are legislators and governors — like those in Florida, Texas, and Ohio — advocating for proactive investment and integration. On the other are policymakers, like Hobbs, who favor tight regulatory frameworks and a wait-and-see approach, especially in light of recent market turbulence and fraud concerns.
While Arizona may not be leading the charge into crypto investment, it is clearly seeking to define a regulatory environment that protects consumers and adapts to the realities of blockchain-based finance.
With crypto’s role in state-level finance, taxation, and consumer protection continuing to evolve, Arizona’s decisions could serve as a blueprint — or a cautionary tale — for other states navigating the digital asset frontier.
