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The digital asset industry received mixed news last week.
A long-lobbied-for bill to overhaul financial regulations for cryptocurrencies failed to advance in the Senate on Sept. 15, but the following day legislation to reform how digital assets are taxed in the U.S. won bipartisan support in the House of Representatives.
The Digital Asset Market Clarity Act (H.R. 3633), broadly known as “the Clarity Act,” failed on a necessary vote to limit debate in the Senate, 49-50. The bill would redefine which digital assets fall under the definition of a commodity versus a security, placing the majority of such assets under the jurisdiction of the Commodity Futures Trading Commission.
But a combination of ethics language meant to prevent token offerings by public officials (and family members) like the ones conducted by President Donald Trump and First Lady Melania Trump after they returned to office, pushback from banks over capital flight concerns, and opposition to the intended policy itself sank the bill.
The Clarity Act was the centerpiece of a multiyear effort to change policy around digital assets that also included the 2025 GENIUS Act and various efforts to modify their taxation. The Digital Asset Tax Certainty Act (DATCA) (H.R. 10357 (PDF - 327.22KB)), focused on tax treatment, had a more successful week and was reported favorably by the House Ways and Means Committee by a vote of 38-5 on Sept. 16. The bill was introduced by Ways and Means Chair Jason Smith, R-Mo., and cosponsored by several Republican committee members, as well as Rep. Steven Horsford, D-Nev.
DATCA combines a number of previously introduced proposals and includes the following key provisions:
- Allows for mark-to-market accounting for tax purposes in digital asset dealing and trading
- Applies existing wash-trade and constructive-sale tax rules to digital assets
- Clarifies that staking and mining rewards attributable to a qualified business unit in the U.S. are taxable in the U.S.
- Creates a $10 de minimis exception for digital asset network and transaction fees, effective December 2027
- Narrows additional digital asset broker reporting
- Creates a temporary safe harbor with lower penalties for individuals who voluntarily disclose their past failure to report digital asset-related gains
Left out of the bill was any provision clarifying the timing of taxing staking and mining rewards, which has been a point of intense debate. Horsford noted that the committee will have “more work to do” in this area.
Notably, but not directly related to digital assets, the bill also would reinstate the full gambling loss deduction, retroactive to Dec. 31, 2025, after it was reduced to a 90% deduction in 2025’s One Big Beautiful Bill Act.
Grant Thornton insight:
Bipartisan support for DATCA could give it momentum to become law in a lame duck session of Congress, but it won’t be clear until after the midterm elections how much — if any — legislation Congress will be prepared to work on before year-end. While crypto tax legislation has been a priority for Smith, Senate Finance Chair Crapo has focused heavily on advancing a bipartisan tax administration bill, the Taxpayer Assistance and Service (TAS) Act.
Some of the tax provisions would be a consolation prize for a digital asset industry that saw a major setback in failure to advance the Clarity Act into law. It is possible, though not probable, that the Senate returns to the Clarity Act in a lame duck session, after Senate Democrats signaled continued willingness to negotiate. Digital asset tax reform would make sense to include with financial regulatory changes, should there be a breakthrough on that bill.
During the same committee markup the panel also advanced H.R. 10334, the EFIN Verification Act, introduced by Rep. Ron Estes, R-Kan., which would require validation of electronic filing identification numbers by the Treasury Department.
Timing of consideration of either DATCA or the EFIN bill before the full House of Representatives remains unclear, as the House is not scheduled to be in session again until Nov. 9, after midterm elections on Nov. 3.
Senate Finance hearing on IRS general counsel nominee
In a necessary step toward a confirmation vote, the Senate Finance Committee held a hearing on the Trump administration’s nominee to be the next IRS general counsel, James Gadwood, currently vice chair of the tax practice of Miller & Chevalier, on Sept. 15. The hearing also included a Tax Court judge nominee, Andrew De Mello, who has served as acting IRS general counsel during this administration.
Sen. Ron Wyden, D-Ore., the top Democrat on Senate Finance, was critical of both nominees, signaling what could be a party-line confirmation vote.
Grant Thornton insight:
A vote on Gadwood’s nomination has yet to be scheduled but could happen before the Senate leaves for the campaign trail later this month. While the IRS has published more OBBBA-related guidance recently, several pieces remain outstanding, and turnover among political appointees at the Treasury Department is believed to have contributed to those delays.
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