What the CLARITY Act means for crypto investors & their taxes

What is the CLARITY Act?

The CLARITY Act is a proposed federal law that would create a single rulebook for how cryptocurrency is regulated in the United States.

Its full name is the Digital Asset Market Clarity Act of 2025, and it's tracked in Congress as H.R. 3633. The bill was introduced in May 2025 and runs more than 300 pages.

The problem the bill is trying to solve is jurisdiction. For years, it hasn't been clear which federal agency regulates a given crypto token, or even whether a token counts as a security or a commodity. That uncertainty has shaped how exchanges operate, which tokens get listed, and how projects raise money.

The CLARITY Act answers that question by assigning clear roles to two regulators and writing rules for the companies in between.

It's worth being precise about what kind of bill this is. The CLARITY Act is a market-structure bill, which means it deals with how crypto markets are overseen. It is not a tax bill, and it does not amend the tax code. That distinction is the whole point of this post.

What does the CLARITY Act actually do?

The CLARITY Act would set up a regulatory framework for digital assets and divide oversight between two federal agencies.

Here's what the bill would do:

• Split oversight between the CFTC and the SEC. The Commodity Futures Trading Commission would get primary authority over "digital commodities" and the markets where they trade. The Securities and Exchange Commission would keep authority over digital assets that are securities.
• Define what a "digital commodity" is. The bill creates a legal definition and a process for a token to qualify, tied to how decentralized its underlying blockchain is.
• Require crypto companies to register. Digital asset exchanges, brokers, and dealers would have to register with the SEC or the CFTC and follow rules for trade monitoring and recordkeeping.
• Protect customer assets. Registered companies would have to keep customer funds separate from company funds, a direct response to exchange collapses like FTX.
• Open up fundraising. The bill creates exemptions that let crypto projects raise money from everyday investors without the full weight of securities law.

The CLARITY Act is often discussed alongside the GENIUS Act, which was signed into law in 2025 and set rules for stablecoins. The GENIUS Act handled stablecoins; the CLARITY Act is the broader market-structure piece.

For context on how earlier crypto legislation has played out, see our guide to how the 2021 infrastructure bill impacts crypto taxes.

Does the CLARITY Act change how my crypto is taxed?

No. The CLARITY Act does not change how your cryptocurrency is taxed.

The bill is about market structure, not taxes. It does not amend the Internal Revenue Code, and it does not touch the rules the IRS uses to tax crypto.

Those rules stay exactly as they are today:

• The IRS treats cryptocurrency as property. For a full overview, see our complete guide to crypto taxes.
• Every time you dispose of crypto, you have a taxable event. Disposals include selling crypto for cash, trading one coin for another, and spending crypto on goods or services.
• You owe capital gains tax on the difference between your cost basis and your proceeds. How much you pay depends on your income and how long you held the asset.
• Crypto you earn from staking, mining, or airdrops is taxed as ordinary income at its fair market value when you receive it.
• You report your capital gains and losses on Form 8949 and Schedule D.

None of that depends on the CLARITY Act. If the bill passes, your tax return looks the same as it does now.

Remember, even a token that the CLARITY Act would classify as a "digital commodity" is still taxed by the IRS as property. The legal label that matters for regulation and the tax treatment that matters for your return are two separate things.

How could the CLARITY Act affect crypto investors indirectly?

While the CLARITY Act doesn't change tax law, it could change parts of the system that your taxes touch.

These effects are indirect, and most of them would take time to show up.

Broker reporting could become more consistent. Starting with the 2025 tax year, centralized exchanges report your crypto activity to the IRS on Form 1099-DA. That reporting requirement comes from a separate law, the 2021 infrastructure bill, not the CLARITY Act. But the CLARITY Act would create clearer registration categories for crypto brokers, which over time could make 1099-DA reporting more uniform across platforms.

Classification doesn't change your tax rate. Whether a token is regulated as a commodity or a security, the IRS still taxes it as property. There is one nuance worth knowing. The wash sale rule, which blocks investors from claiming a loss on a security they rebuy quickly, currently does not apply to crypto because crypto is treated as property, not as a security. The CLARITY Act does not change the wash sale rule. Separate proposals have tried to extend it to crypto, but those are different bills.

Better records from more regulated exchanges. If exchanges operate under clearer rules, the transaction data and tax documents they hand you could become more reliable. Cleaner records make your own tax reporting easier.

It's important to note that none of these effects are guaranteed, and none of them would happen the moment the bill is signed. New rules take time for regulators to write and for companies to follow.

Is the CLARITY Act passed?

Not yet. As of May 2026, the CLARITY Act has passed the House of Representatives but has not become law.

In July 2025, the House passed the bill with bipartisan support, as 78 Democrats joined 216 Republicans in voting for it.

The bill then moved to the Senate, where it has been under review by the Senate Banking Committee. A bill has to pass both the House and the Senate and then be signed by the President before it becomes law, so the Senate is the current step.

Its path through the Senate is less certain than its path through the House was. The timeline could stretch out, and the bill's text could change before any final vote.

Because this is an active piece of legislation, the status above reflects May 2026. If you're reading this later, check the congressional record for the current state of the bill.

What does the CLARITY Act mean for XRP and other tokens?

A lot of the attention on the CLARITY Act has focused on specific tokens like XRP. The interest comes from the security-versus-commodity question, which has been a long-running legal issue for XRP in particular.

The CLARITY Act would give tokens a clearer path to be classified as digital commodities regulated by the CFTC. For a project, that classification affects which agency oversees it and which rules it follows.

For your taxes, though, the classification changes nothing. XRP, and every other cryptocurrency, is taxed by the IRS as property today, and it would still be taxed as property if the CLARITY Act becomes law. The token's regulatory label and its tax treatment are separate questions.

What should crypto investors do now?

For your taxes, the CLARITY Act doesn't ask anything of you. The practical answer is that your tax obligations have not changed.

Here's what that means in practice:

• Keep reporting your crypto. Every disposal is still a taxable event, and crypto income is still ordinary income. That is true today and would stay true under the CLARITY Act.
• Keep tracking your cost basis. Your cost basis is what determines your gain or loss. You need an accurate record of it across every wallet and exchange you use, and that need doesn't change with this bill.
• Watch for your Form 1099-DA. If you used a centralized exchange, expect a 1099-DA. Check it against your own records, because the cost basis it reports can be incomplete.
• Don't wait on the legislation. The CLARITY Act is about how crypto is regulated going forward. It does not affect the return you file for the current tax year.

Remember, regulatory news moves fast, but your filing obligations are steady. The reporting rules that apply to your next tax return are the same ones that apply today.

File your crypto taxes no matter what Congress does

The CLARITY Act could change how crypto markets are regulated. It won't change the tax return you need to file.

Your reporting obligation is here today. Every disposal still needs a cost basis, and every 1099-DA still needs to be checked against your own records.

CoinLedger connects to your wallets and exchanges, pulls in your full transaction history, and reconciles it against the forms your exchanges report, so your gains and losses are accurate before you file. More than 700,000 investors use CoinLedger to track their crypto and file their taxes. Get started with a free CoinLedger account today.