US CLARITY Act Raises Tax Questions and Geopolitical Stakes

The Digital Asset Market Clarity Act (CLARITY Act), approved by the Senate Banking Committee on May 14, 2026, would allocate regulatory authority over digital assets between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). The CFTC would gain exclusive jurisdiction over spot markets for “digital commodities,” a move that could affect tax treatment under the Internal Revenue Code, including potential eligibility for the safe‑harbor provision of Section 864(b)(2)(B) and mark‑to‑market treatment under Section 475.

Analysts warn that if Congress does not enact the CLARITY Act, China could step in to shape global digital‑asset standards. Strategist James E. Thorne said, “What they miss is that the real winner in that scenario is not ‘prudence,’ it is China,” emphasizing that U.S. hesitation may allow Beijing to define alternative financial rails and influence the future architecture of global finance.