The Senate Killed CLARITY — 24 Hours Later, a 38–5 Vote Made Crypto History on Taxes (And It Comes With a Catch)

On September 15, the US Senate voted 49–50 to kill the CLARITY Act’s procedural motion. Market structure reform — the thing the entire industry has been lobbying for since 2023 — died on the floor. Twenty-four hours later, on September 16, the House Ways and Means Committee voted 38–5 to advance H.R. 10357, the Digital Asset Tax Certainty Act. That is a bigger deal than the headline number suggests, and it is also a trade, not a gift.

Read it again in plain English. Washington could not agree on how to regulate crypto. It agreed on how to tax it — first, and by a wide margin. The tax track just overtook the market structure track, and it did it in a single afternoon.

What Actually Happened on September 16

The bill was introduced on September 14 by Ways and Means Chairman Rep. Jason Smith (R-MO-8) and referred to committee the same day. Two days later, the committee adopted an Amendment in the Nature of a Substitute offered by Chairman Smith — a full-text replacement — and then passed it 38 yeas, 5 nays, per the committee’s official roll call.

The committee’s own one-pager calls it, verbatim, “the first federal legislation ever to address the substantive tax treatment of cryptocurrencies and other digital assets.” Not enforcement, not reporting, not broker paperwork — substantive treatment. What is income, what is a gain, when does it count.

One correction to the story you will see on social media: this was not a bipartisan lovefest and it was not a party-line wipeout. Republicans supported it. Democrats split. Rep. Linda Sánchez (D-CA) publicly backed it, arguing the bill gives digital assets “parity” with other financial markets, while other Democrats argued the committee should be working on cost of living. EY’s tax desk recorded the split. The bill’s own record spans a July 2025 Oversight subcommittee hearing and a full committee legislative hearing on June 9, 2026.

And before anyone books a tax strategy around it: this is not law. Committee passage moves it to the House floor. It has not been scheduled there. PYMNTS, citing the Wall Street Journal, reports the bill may not reach the floor until after the election — and if Democrats take the House in November, it can be shelved entirely.

What Gets Easier (Title I and Title II)

The bill’s structure is simple if you read the section numbers. Title I removes friction from using crypto as money. Title II gives digital assets the same treatment as comparable traditional financial assets.

Network fees under $10 stop being taxable events. New IRC §1044 creates a de minimis exception for disposing of digital assets to pay a network fee, provided the total for that validation does not exceed $10, or to pay a non-network transaction fee, provided the fee is paid in the same asset being transferred and again does not exceed $10. No gain, no loss. This applies to dispositions after December 31, 2027.

Stablecoins get a real basis rule. New IRC §1063 sets the basis of a qualified US dollar stablecoin at its redemption value, which removes the absurd grind of tracking pennies of gain every time you move dollars into USDC and back. Treasury is directed to provide interim rules before final regulations arrive. Applies to tax years beginning after December 31, 2026.

Lending your coins stops triggering a taxable event. Sec. 201 extends the IRC §1058 securities lending safe harbor to “traded digital assets” by redefining specified assets as securities plus traded digital assets. Under current law, lending crypto out can be read as a disposition. That read disappears.

Dealers can elect mark-to-market. Sec. 202 amends IRC §475 so dealers in covered digital assets can elect mark-to-market accounting like securities and commodities dealers.

Charitable giving gets simpler. New IRC §1046 lets common digital assets qualify for the same streamlined charitable contribution treatment as publicly traded securities, including a conversion pathway and an appraisal exception.

Simplified accounting. New IRC §1051 allows an election to use a simplified gain and loss method for widely traded digital assets, aggregated by asset class. Applies to tax years beginning after December 31, 2027.

That is the part of the bill the press release leads with. Now the other part.

What Gets Harder (Title III and Title IV) — This Is the Catch

Title III’s stated purpose is to apply existing tax anti-abuse rules to digital assets, and it does exactly what it says.

The wash sale rule comes for crypto. Sec. 301 rewrites IRC §1091, replacing “stock or securities” with “specified assets,” defined to include traded digital assets. Right now, if you sell Bitcoin at a loss and rebuy it five minutes later, you still claim the loss, because §1091 has never applied to crypto. That entire maneuver is on the chopping block.

Constructive sale rules extend too. Sec. 302 applies constructive sale treatment to digital assets. Sec. 303 pulls subpart F and PFIC rules in as well, and — this is the sleeper provision — directs Treasury to issue guidance within 12 months covering foreign entities organized as foundations in connection with decentralized autonomous organizations, including how those entities can reorganize as US C-corporations, plus a temporary safe harbor encouraging foundations established before September 14, 2026 to convert.

Staking and mining rewards are ordinary income with no deferral. New IRC §1261 states that income from digital asset validation supporting activities is ordinary income, with source rules based on where the taxpayer or the relevant business is located. Here is the part that matters: this version contains no optional deferral. Earlier drafts floated letting some miners and stakers postpone recognition until they sold the coins. That option is gone. You are taxed when you receive the tokens, whether or not you have sold anything. Crypto Council for Innovation chief strategy officer Alison Mangiero called the vote historic and asked Congress to revisit exactly this timing question.

One clarification worth repeating, because it is being misreported. The $10 provision covers qualifying fees — network fees and transaction fees. It is not a general retail payment exemption. Buying a coffee with Bitcoin is not made tax-free by this bill. CCI is asking for the de minimis scope to be widened; it has not been widened yet.

a16z crypto’s policy head and general counsel Miles Jennings framed the bill as giving founders clearer rules and opening a path for crypto foundations to return to the US tax framework — a direct reference to the DAO reorganization provisions. CCI agrees the DAO language could bring innovation and jobs back onshore while arguing the package still needs technical correction.

What Your Taxes Look Like Today, September 2026

Strip out the bill entirely and this is the ground you are standing on right now.

Digital assets are property in the US tax code. Every disposition is a taxable event, including crypto-to-crypto swaps, paying for goods with coins, and paying on-chain fees. Cost basis tracking is not optional.

Brokers report on Form 1099-DA, and the IRS instructions draw a hard line at January 1, 2026. For transactions from January 1, 2025 onward, brokers report gross proceeds. For transactions from January 1, 2026 onward, they must also report cost basis for covered securities. Noncovered assets still do not require basis reporting, though brokers may volunteer it.

The current reporting thresholds: digital asset payment processors (PDAPs) are exempt below $600 for the year; qualified stablecoins under the optional aggregate method are exempt below $10,000 in designated sales; specified NFTs are exempt below $600.

Basis must be allocated wallet by wallet and account by account under Rev. Proc. 2024-28, which requires taxpayers to distribute unused pre-2025 basis across the remaining units in each wallet. Notice 2025-07 provides interim relief on making adequate and timely designations for units held at brokers. The IRS digital assets page remains the base reference.

And the wash sale rule? It does not apply to ordinary crypto today, because §1091 says stock or securities. The “Wash Sale Loss Disallowed” field on Form 1099-DA currently handles tokenized securities. H.R. 10357 closes the gap that sentence describes.

What the Industry Still Wants

The bill is not what the industry asked for in full. Three things are missing. First, no deferral option for validation income — a staker who receives tokens and watches the price fall between receipt and sale eats a tax bill on value that evaporated. Second, the $10 de minimis rule covers fees, not everyday payments, so the “use crypto as money” argument is only half answered. Third, the market structure bill that was supposed to arrive first is dead in the Senate, and tax rules landing before structure rules is backwards. Kevin O’Leary has said he expects Congress to revisit CLARITY by the second quarter.

What to Do Before December 31, 2026

Do not build a tax plan on a bill that has not passed the House floor. What you can do is prepare for either outcome, because both paths converge on the same chores.

Get your wallet-level basis allocated properly for the 2024-28 method. Reconcile every 1099-DA you receive against your own records before filing season, not during it. If you have been harvesting crypto losses and rebuying immediately, understand that this is the behavior under direct attack — the value of that position depends on whether the bill becomes law, and it will not be grandfathered forever. If you stake or mine, model ordinary income recognition at receipt, because that is the direction of travel in both the bill and the CCI critique, and only the timing is still in dispute. If you operate through an offshore foundation connected to a DAO, the 12-month Treasury guidance window and the safe harbor for pre-September 14, 2026 entities is the single most consequential provision in the text for you.

And keep the price backdrop in perspective. Bitcoin is trading around $81,577, up 0.41% on the day, with Ethereum at $2,684 and total crypto market cap near $2.81 trillion. Spot Bitcoin ETFs saw $450 million of outflows on September 15 and $296 million on September 16 — the CLARITY vote and the FOMC hike — then flipped positive with $159.5 million on September 17 and $433.03 million of net inflows on September 18, led by Fidelity’s FBTC at $310.7 million and BlackRock’s IBIT at $108.4 million. The Fed raised rates a quarter point to 3.75%–4.00% on September 16, 12–0, the first hike since July 2023. Tax law does not move with the tape, and this bill will not be decided by it either.

The structural takeaway is the one worth keeping. For a decade the industry’s answer to “what are the rules” was “we are still writing them.” On September 16, Washington wrote the part that touches your money every April — and attached the anti-abuse rules that close the loopholes that made crypto taxes cheap. Both halves are real. Price the whole bill, not the press release.