Charles Hoskinson, founder of Cardano (ADA), called the CLARITY Act a dangerous piece of legislation that would classify nearly all digital assets as securities by default and give a hostile Securities and Exchange Commission the tools to throttle the U.S. crypto industry for years to come.
What Happened: Hoskinson Attacks Crypto Bill
In a Mar. 3 YouTube broadcast, Hoskinson delivered a detailed technical critique of H.R. 3633, the Digital Asset Market Clarity Act of 2025. He argued the bill creates a "security by default" framework under which every new project — including protocols like XRP (XRP) and Ethereum (ETH) at the time of their launches — would be classified as an investment contract asset under SEC jurisdiction.
The path to graduating to a digital commodity regulated by the CFTC, he warned, is loaded with bureaucratic traps. Hoskinson outlined what he called "attack vectors" that would allow the SEC to exploit rulemaking authority and keep projects locked in security status indefinitely, pointing to standards for decentralization he called impossible to prove and subjective value attribution tests.
"This is not a good bill," Hoskinson said, adding that through rulemaking it could become "horrific and weaponized."
He stressed that while established projects like Cardano and XRP might be grandfathered in, the legislation would force all future American crypto innovation overseas.
The bill passed the House in 2025 but has stalled in the Senate. A White House-imposed Mar. 1 deadline for stakeholders to reach a compromise passed without resolution, with disputes over stablecoin rewards — which the banking industry warned could trigger a massive deposit exodus — blocking progress.
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Why It Matters: Industry Leaders Split on Strategy
The debate has fractured crypto leadership. Ripple CEO Brad Garlinghouse, who has predicted a 90% chance of the bill becoming law by April, has continued to back it, arguing that clarity is preferable to regulatory chaos and that the industry should not let the perfect become the enemy of the good.
Ripple CTO David Schwartz struck a similar tone on X, acknowledging the tradeoff while maintaining that a suboptimal bill is better than no bill at all.
Hoskinson rejected that argument entirely. He warned that signing a flawed bill into law would codify everything former SEC Chair Gary Gensler had been trying to impose on the industry — a result he considers worse than the current regulatory vacuum.
The stakes extend beyond the current political fight.
As Yellow Media previously reported, JPMorgan analysts led by Managing Director Nikolaos Panigirtzoglou identified the CLARITY Act's potential passage by mid-2026 as a key positive catalyst for crypto markets in the second half of the year. The team wrote that the bill, if enacted, would reshape market structure by ending regulation by enforcement and opening the door to greater institutional participation — even as broader investor sentiment remains firmly risk-off amid macroeconomic uncertainty.
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