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Investor Kevin O’Leary says the CLARITY Act’s failure in the Senate on Sept. 15 was a delay, not a defeat, and that lawmakers will be forced to revisit crypto market structure legislation once they begin collecting tax revenue from digital asset activities. He made the remarks at Avalanche Summit in New York on Sept. 17. The bill fell 11 votes short of the 60 needed to advance, drawing 49 votes in total.
O’Leary said he never expected the bill to pass this week. “The chances of CLARITY passing, in my view, were zero, and that’s what happened,” he said. The legislation aimed to establish a federal framework for crypto markets, including defined roles for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The same week the CLARITY Act failed in the Senate, the House Ways and Means Committee advanced the Digital Asset Tax Certainty Act. That bill seeks to establish tax rules for staking, mining, small crypto transactions, and broker requirements. O’Leary said the two developments together create a contradiction Congress will eventually have to resolve.
He argued that taxing a financial activity without a regulatory framework to govern it is not a sustainable position. “Once you tax, you’ve got to have policy,” he said. As staking and other crypto activities becomece growing pressure to define the rules around those same activities. “We’re going to tax staking,” he said. “You know with certainty that policy’s coming in CLARITY, and it has to.”
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O’Leary said he expects Congress to return to the CLARITY Act regardless of which party controls Congress after the midterm elections. He put the likely window for that return at Q1 or Q2 of the year following the midterms. “When will it come? Probably in the first or second quarter after the midterms,” he said.
The CLARITY Act aimed to settle one of the longest-running disputes in US crypto regulation: whether digital assets should be treated as securities under the SEC or commodities under the CFTC. That question remains unresolved. O’Leary’s view is that the tax legislation now moving through Congress makes resolving it unavoidable, since the government cannot collect revenue from activities it has not yet decided how to regulate.
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