Clarity Act Stalls, But Washington's Crypto Machinery Keeps Grinding: Tax Bill Advances as Gillibrand Signals Democrats Aren't Done
Sen. Kirsten Gillibrand says the CLARITY Act is "not the end" — but with analysts already writing off this Congress, the real action has shifted to the House Ways and Means Committee, where the Digital Asset Tax Certainty Act just cleared markup, and to the SEC and CFTC, where rulemaking is quietly becoming the de facto regulatory framework for U.S. crypto.
Cold Open
The CLARITY Act is dead for this Congress — or at least, that's what industry analysts are pricing in. But the legislative machinery in Washington hasn't stopped, and that distinction matters enormously for anyone with capital deployed in digital assets.
On Wednesday, the House Ways and Means Committee approved the Digital Asset Tax Certainty Act (H.R. 10357), sending a sweeping crypto tax overhaul to the full House. The same week, Sen. Kirsten Gillibrand publicly insisted Democrats remain committed to passing the CLARITY Act, calling the setback "not the end."
Two signals, one message: the U.S. regulatory apparatus is not frozen — it's rerouting. For traders, the question isn't whether CLARITY passes this session. It's which parts of the stack get clarity first, and how that repricing flows into token valuations, exchange volumes, and institutional allocation decisions.
Chronological Timeline & Verified Data
The CLARITY Act Setback
The CLARITY Act — the market structure bill that would have drawn bright lines between SEC and CFTC jurisdiction over digital assets — has effectively stalled in the current Congress. Industry analysts assessing the legislative calendar have concluded that passage this session is highly unlikely, pointing instead to the SEC and CFTC's rulemaking efforts as the more probable near-term source of regulatory clarity.
That's not a minor footnote. For the past several years, the entire U.S. crypto market structure debate has hinged on whether Congress would legislate jurisdiction or whether the agencies would define it through enforcement and rulemaking. The CLARITY Act was the legislative answer. Its stall means the agency answer is now the default.
Gillibrand's Pushback: "Not the End"
Sen. Gillibrand (D-N.Y.) — one of the more crypto-literate Democrats on Capitol Hill — pushed back on the obituary narrative. Her message: Democrats remain committed to passing the CLARITY Act, and the current impasse should not be read as a permanent abandonment of market structure legislation.
That framing is consistent with a broader political reality. Crypto policy has become one of the few genuinely bipartisan lanes in a polarized Congress, and Democrats — particularly those representing New York's financial constituency — have strong incentives to stay at the table rather than cede the issue entirely to Republicans.
The Lame-Duck Wildcard
Policy advocates have floated a specific procedural path: the CLARITY Act could get another shot during the lame-duck session — the post-election window when outgoing lawmakers sometimes push through legislation before the new Congress is seated.
Lame-duck sessions are historically where stalled bills either get resurrected or formally die. The fact that advocates are publicly naming this window suggests the bill isn't procedurally dead — it's parked. Whether it moves depends on post-election composition, leadership priorities, and whether the political cost of inaction outweighs the cost of a rushed markup.
The Tax Bill: Where the Action Actually Is
While CLARITY stalls, the Digital Asset Tax Certainty Act just cleared a major hurdle. The House Ways and Means Committee approved the proposal on Wednesday, advancing it to the full House.
Committee Chairman Rep. Jason Smith (R-Mo.) framed the bill as the product of more than a year of bipartisan work, saying it brings "clarity, parity, and workability to digital asset taxation" and helps keep the U.S. the "crypto capital of the world, instead of pushing that innovation, and the jobs that come with it, offshore."
The bill's provisions are concrete and, for active crypto users, materially impactful:
De minimis transaction fee relief: Removes gain-or-loss calculations on qualifying network or transaction fees of $10 or less. This matters because paying fees with tokens can trigger tax accounting — digital assets are treated as property. The relief begins in 2028 and applies to eligible fee payments, not small crypto purchases generally.
Stablecoin simplification: Simplifies tax calculations for qualifying dollar stablecoins traded near their redemption value.
Mining and staking: Classifies mining and staking rewards as ordinary income.
Investment trusts: Allows certain investment trusts to stake assets without losing their tax status solely for doing so.
Wash-sale rules: Extends wash-sale rules to traded digital assets, generally delaying loss deductions when positions are repurchased within a defined window.
Notable exclusion: The bill drops an earlier proposal that would have let taxpayers defer recognition of some mining and staking rewards.
The bill must still pass both chambers of Congress before reaching the president. That's a high bar — but the markup itself is a signal that tax policy, unlike market structure, has enough bipartisan gravity to move.
Trading Angle
What This Means for Market Structure
The CLARITY Act's stall removes a near-term catalyst that many institutional desks had penciled into their 2026-2027 allocation models. Market structure legislation was the cleanest path to resolving the SEC-vs-CFTC jurisdictional ambiguity that has kept large swaths of U.S. institutional capital on the sidelines or offshore.
But the absence of legislation does not mean the absence of clarity. The SEC and CFTC's rulemaking efforts are now the primary channel through which U.S. crypto regulation will evolve. For traders, this shifts the information edge from legislative calendars to rulemaking dockets, comment periods, and enforcement actions.
The practical implication: regulatory alpha is now procedural, not political. Watching Federal Register notices, agency agendas, and commissioner statements will matter more than tracking floor votes.
The Tax Bill's Real Market Impact
The Digital Asset Tax Certainty Act is not a market structure bill, but its provisions touch the operational economics of several key sectors:
Staking and mining tokens: Classifying staking and mining rewards as ordinary income at receipt is the status quo interpretation in many jurisdictions, but codifying it removes ambiguity. The exclusion of the deferral proposal is a negative for miners and stakers who had hoped for tax-deferred treatment — they will owe tax on rewards at receipt even if they don't sell. Watch for any repricing in staking-heavy tokens and mining equities if this provision survives to final passage.
Stablecoins: Simplifying tax calculations for dollar stablecoins traded near redemption value reduces friction for high-frequency stablecoin users and payment rails. This is structurally supportive for stablecoin volumes and the exchanges and payment processors that facilitate them.
Active traders: The de minimis fee relief — capped at $10 or less and starting in 2028 — is a long-dated positive. It won't change 2026 tax bills, but it signals a legislative willingness to reduce the tax accounting burden on on-chain activity. The wash-sale extension, however, is a headwind for tax-loss harvesting strategies in digital assets, bringing crypto closer to equity-like treatment.
Key Levels and Positioning to Monitor
Legislative calendar risk: The lame-duck session is the next binary event for CLARITY Act odds. Any credible signal that leadership will bring the bill to the floor would be a positive catalyst for U.S.-listed exchanges, custody providers, and DeFi-adjacent tokens with U.S. regulatory exposure.
Rulemaking watch: SEC and CFTC rulemaking proposals — particularly around token classification, custody, and exchange registration — are the new front line. Each substantive proposal is a potential volatility event for tokens whose regulatory status is most contested.
Tax bill progression: The full House vote is the next checkpoint. If the bill advances, watch for mining and staking sector sensitivity to the ordinary-income classification and the dropped deferral provision.
Institutional flow signals: With legislative clarity delayed, institutional allocation decisions will increasingly hinge on agency guidance and enforcement posture. Any softening in enforcement — or clearer safe-harbor frameworks — could unlock sidelined capital faster than legislation would have.
The So What?
The headline is "CLARITY Act stalls." The tradeable reality is more nuanced: Washington is still legislating crypto — just through different channels. The tax bill's committee approval shows that bipartisan crypto policy is alive. Gillibrand's comments show that market structure legislation isn't abandoned, just delayed. And the analysts' pivot to SEC and CFTC rulemaking shows where the real regulatory action is moving.
For traders, the takeaway is to stop trading the CLARITY Act headline and start trading the rulemaking calendar. The next 12 months of U.S. crypto regulation will be written in agency dockets, not floor votes — and the market that positions for that shift first will capture the repricing.
Sources
The Block: 'Not the end': Sen. Gillibrand says Democrats still committed to passing Clarity Act
Decrypt: Crypto Tax Bill Clears House Committee After Clarity Act Setback
Cointelegraph: CLARITY Act could get another shot during lame-duck session, policy advocate says
CoinDesk: U.S. House's tax committee advances crypto tax bill in wake of Clarity Act loss
💡 Disclaimer: This analysis compiles verified media reports and open-source intelligence for independent research (DYOR). Digital asset markets are highly volatile; scenarios discussed do not constitute financial advice or investment recommendations.
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