Washington may be close to delivering a long-awaited regulatory framework for digital assets, but critics argue that market structure legislation alone will not move the needle on mainstream
Washington may be close to delivering a long-awaited regulatory framework for digital assets, but critics argue that market structure legislation alone will not move the needle on mainstream crypto adoption. According to CoinDesk, the missing piece is not regulatory clarity, it is tax reform.
The Digital Asset Market Clarity Act, formally known as the CLARITY Act of 2025, is the most comprehensive piece of crypto regulation ever to pass one chamber of the US Congress.The Senate Banking Committee advanced the bill by a 15-9 vote, with Democratic Senators Ruben Gallego and Angela Alsobrooks joining all Republicans on the panel. The bill still faces a full Senate vote before it can become law.
The CLARITY Act significantly narrows the scope of assets the SEC can claim, moving regulatory authority over the largest and most active part of the crypto market to the CFTC by defining most blockchain-native tokens as digital commodities rather than securities. Supporters say this ends years of damaging regulatory ambiguity. The lack of a unified regulatory framework has resulted in what many stakeholders describe as "regulation by enforcement," creating legal uncertainty, constraining traditional financial institutions, and pushing innovation abroad.
Even if the CLARITY Act clears the Senate, a parallel problem remains unaddressed: the US crypto tax regime is widely regarded as unworkable for ordinary users. The central issue is Form 1099-DA, the IRS reporting form introduced for the 2025 tax year.
Form 1099-DA is mainly designed to report certain digital asset sales handled by custodial brokers, meaning it may capture activity from a centralized exchange but will not automatically cover everything done across wallets, DeFi platforms, staking programs, NFT marketplaces, or peer-to-peer transactions.
For users who engage in decentralized finance, the rollout of Form 1099-DA may cause increased confusion, inaccurate reporting, and heightened audit risk stemming from the mismatch between how crypto transactions function and how they will be reported on the form.
Cost basis tracking is another major gap. For the 2025 tax year, exchanges report only gross proceeds on a per-transaction basis. That changes for the 2026 tax year, when brokers will also report cost basis, but only for assets bought and sold on the same exchange after January 1, 2026. For everything acquired before that date or transferred between platforms, the basis gap persists.
After accounting for exemptions and out-of-scope activities, the reporting gap becomes substantial, with estimates suggesting only around half of all transactions will be covered by 1099-DAs. The absence of cost basis information is expected to be the most immediate hurdle for the current filing season.
The result is that users are still forced to manually reconstruct complex transaction histories. The IRS receives a copy of every 1099-DA issued, and if a tax return does not perfectly match the gross proceeds reported on those forms, it triggers an automated red flag that can lead to a CP2000 notice or a full audit. Until Congress addresses the underlying tax complexity, even the most well-designed market structure bill is likely to leave retail participation constrained.
SourcesCNBC: Crypto industry scores win as Clarity Act clears Senate hurdleTaxBandits: What Form 1099-DA Does Not CoverThe Tax Adviser: Navigating the Form 1099-DA Reporting Maze
