Clarity Act Stalled: What the Crypto Tax Bill Means for Staking in the US
Congress is on a path to define how crypto staking is taxed before it has agreed on how the crypto industry should be regulated. That is the central tension Kevin O'Leary highlighted at the Avalanche Summit in New York this week, and it matters directly to anyone in the US who earns staking rewards. Understanding crypto staking tax rules and how crypto is taxed in the US right now, separate from what may or may not pass in 2027, is the starting point for staying compliant.
What Happened This Week in Washington
Two separate pieces of legislation were in play simultaneously, and they pulled in opposite directions.
The Clarity Act vote failed in the Senate
The Clarity Act was designed to create a comprehensive federal framework for digital asset markets. Its core purpose was to draw a clearer boundary between assets regulated by the Securities and Exchange Commission and those falling under the Commodity Futures Trading Commission. That boundary has been disputed territory for years, affecting everything from how exchanges list tokens to how staking protocols describe their services.
The bill did not get the votes it needed to advance in the Senate. Speaking at the Avalanche Summit, O'Leary said he saw this coming. "The chances of Clarity passing, in my view, were zero, and that's what happened," he told the audience. He framed the outcome as a delay rather than a defeat, and said he expects Congress to return to the issue after the midterm elections, most likely in the first or second quarter of 2027.
The House crypto tax bill kept moving
On a separate track, the House Ways and Means Committee advanced its own digital asset tax bill this week. That bill addresses broker reporting requirements, a potential de minimis exemption for small everyday crypto transactions, and tax treatment for stablecoins. For a detailed breakdown of what the committee passed and what it dropped, see our coverage of what the House Ways and Means crypto tax bill means for you.
Notably, an earlier draft of the House bill had included a deferral provision for staking and mining income, which would have delayed the tax point until rewards were sold rather than received. That provision did not survive. For more on why it was cut, see our article on staking tax rules dropped from the House bill. The result is a bill that moves toward defining crypto tax obligations without resolving the deferred-income question that many stakers were hoping for.
O'Leary's Argument: Tax Revenue Forces the Regulatory Question
O'Leary's point at the Summit was not simply that the Clarity Act will return. It was that the advancing tax bill makes its return almost inevitable. His reasoning is straightforward: once the federal government is actively collecting tax on staking rewards, it becomes politically and practically difficult to leave the activity in a regulatory grey zone.
The logic of sequencing
"Once you tax, you've got to have policy," O'Leary said. The argument is that tax rules create a formal recognition of an activity. If Congress says staking rewards are taxable income, it is implicitly acknowledging staking as a legitimate economic activity. Acknowledging that activity while leaving its regulatory status undefined is a position that becomes harder to defend the longer it continues, particularly as staking grows as a source of federal revenue.
"We're going to tax staking," O'Leary said. "You know with certainty that policy's coming in CLARITY, and it has to." His expectation is that the political pressure generated by an active tax regime on crypto will bring market-structure legislation back to the floor, regardless of which party controls Congress after the midterms.
What this means for the regulatory timeline
O'Leary's projected window, the first or second quarter of 2027, is speculative. Congressional timelines are notoriously difficult to predict, and the Clarity Act still needs to build enough Senate support to pass. What is less speculative is the underlying dynamic he describes: a functioning crypto tax regime and an absent regulatory framework create pressure for alignment. Whether that pressure resolves quickly or drags on for several more legislative cycles is genuinely uncertain.
How Is Crypto Staking Taxed in the US Right Now
While Congress deliberates, the IRS position on staking has not changed. Staking rewards are treated as ordinary income in the year you receive them. The taxable amount is the fair market value of the tokens at the moment they land in your wallet.
The income recognition question
This approach has been contested. The Jarrett case in Tennessee raised the argument that newly created tokens, including staking rewards, should not be taxable until sold, on the grounds that they are newly created property rather than income. The IRS has maintained its income-at-receipt position, and the House bill as currently drafted does not introduce a deferral mechanism for stakers. So until the law changes, receipt equals taxable event.
The second tax: capital gains on disposal
Staking creates two separate tax moments. The first is income tax at receipt, calculated on the value when the reward arrives. The second is a capital gains calculation when you later sell, swap, or otherwise dispose of those tokens. Your cost basis for the capital gain calculation is the value you used to report income, meaning the fair market value at receipt. If the token price rises between receipt and sale, you owe capital gains tax on the difference. If it falls, you have a capital loss, which may offset other gains.
This two-step structure is why clean records matter so much. Every staking reward is its own lot, with its own basis and its own holding period. If you hold the rewarded tokens for more than a year before selling, the gain on disposal qualifies for long-term capital gains rates, which are lower than ordinary income rates for most filers.
What US Stakers Need to Do Today
The legislative uncertainty does not create a pause in your filing obligations. Whether the Clarity Act passes in Q1 2027 or never, your 2026 staking rewards are reportable on your 2026 return. Waiting for policy clarity before organising your records is a strategy that tends to produce errors under time pressure.
Building a reliable staking record
For every staking reward you receive, you need the date, the quantity of tokens, and the price of the asset in US dollars at that exact time. Most staking platforms provide transaction histories, but the granularity varies. Some report in UTC timestamps, others in local time, and some aggregate daily rather than per-reward. Pulling these records from multiple sources and reconciling them is the core of any accurate crypto tax report for a staker.
Once you have the income side, you need to track every subsequent disposal of those tokens to calculate capital gains or losses. The asset type, the acquisition date, the acquisition value (the income figure you reported), the disposal date, and the disposal proceeds are the five data points you need per lot. Using a reliable crypto tax calculator to consolidate this across wallets and protocols is the practical solution for anyone staking across more than one platform.
Accounting method choice
The IRS allows specific identification of lots, meaning you can choose which tokens you are selling if you can demonstrate that identification in your records. This gives you meaningful control over whether a given disposal realises a short-term or long-term gain, and whether you are disposing of a high-basis or low-basis lot. The choice needs to be made at the time of the transaction, not retrospectively, which is another reason that real-time record-keeping beats end-of-year reconstruction.
The Bigger Picture for US Crypto Holders
The week's events in Washington illustrate a pattern that has characterised US crypto policy for several years: tax enforcement moving faster than regulatory definition. The IRS has been actively asserting reporting requirements, including the new Form 1099-DA broker reporting regime, while the question of which assets are securities, which are commodities, and which rules apply to staking protocols remains open.
O'Leary's argument is that this gap is self-closing, that taxing an activity creates the political will to regulate it. That may well be true over a multi-year horizon. In the short term, it means US crypto holders are operating in an environment where their obligations to the IRS are real and enforced, while the industry rules that might shape those obligations are still being written. The practical response is to treat current IRS guidance as the operative rule set, keep granular records, and use a dependable crypto tax calculator to stay on top of the numbers as the law evolves.
Frequently Asked Questions
Is crypto staking taxable in the US right now?
Yes. Under current IRS guidance, staking rewards are treated as ordinary income at the time you receive them, valued at their fair market value on that date. This position has not changed because the Clarity Act stalled or because the House tax bill is still moving through Congress. Your obligation to report staking income on your tax return stands today.
What would the House Ways and Means crypto tax bill change about staking?
The bill that advanced through the House Ways and Means Committee seeks to codify tax rules for a range of digital asset activities, including staking and mining. Earlier drafts included a deferral provision for mining and staking income, but that was removed before the committee vote. The bill as advanced focuses on broker reporting requirements, de minimis exemptions for small transactions, and clearer rules for stablecoins, rather than deferring tax on staking rewards.
What is the Clarity Act and why did it fail?
The Clarity Act was a proposed federal framework designed to split regulatory authority over crypto assets between the SEC and the CFTC, giving clearer guidance on which tokens count as securities and which as commodities. It failed to advance in the Senate this week, falling short of the votes needed to proceed. Kevin O'Leary, speaking at the Avalanche Summit in New York, said he expected the result and believes lawmakers will revisit the bill in the first or second quarter of 2027, after the midterm elections.
Why does taxing staking without a regulatory framework matter?
If Congress defines how staking rewards are taxed before defining what staking is as a regulated activity, crypto holders face a situation where their tax obligations are clear but the legal status of the platforms and protocols they use remains ambiguous. O'Leary's argument is that this tension will force lawmakers to resolve the regulatory side: you can't collect tax revenue from an activity you haven't decided how to regulate indefinitely.
What should I do to calculate my crypto staking tax now?
Start by pulling a complete record of every staking reward you've received, including the date, the amount, and the price of the asset on that date. Each reward is likely taxable as ordinary income at receipt. When you later sell or exchange those staked tokens, a capital gain or loss calculation also applies based on your cost basis, which is the value at the time you received the reward. Keeping clean, timestamped records now will make your crypto tax report far easier to produce, regardless of how the law changes.
Source: CoinDesk Policy