TL;DR:
- Hoskinson labeled the CLARITY Act “garbage legislation” and warned it would classify almost all digital assets as securities by default.
- According to the Cardano founder, the law would give the SEC the power to trap projects in security status indefinitely through arbitrary regulation.
- Ripple’s Garlinghouse defends the bill with a 90% chance of passage, while the crypto industry remains deeply divided.
Charles Hoskinson, founder of Cardano, launched a frontal attack against the CLARITY Act, the main crypto market structure bill in the United States. In a YouTube livestream, Hoskinson described H.R. 3633, the Digital Asset Market Clarity Act of 2025, as a “terrible piece of garbage legislation” that would hand the SEC an arsenal to suffocate the industry for years.
The core of his argument targets the “security by default” mechanism established in the bill’s text. Under that framework, every new digital project would be classified as an “investment contract asset” under SEC jurisdiction from launch, without exception. According to Hoskinson, had this rule been in place at the time, both XRP and Ethereum would have been trapped in that status from the very beginning.
Hoskinson Criticizes the SEC’s Impossible Standards
The path to migrating into the “digital commodity” category regulated by the CFTC, Hoskinson explained, is riddled with obstacles custom-built for an abusive regulator. Among the attack vectors he identified are decentralization standards that are impossible to demonstrate and subjective “value attribution” tests that the SEC could manipulate at will to keep projects under its control indefinitely. “Through the regulatory process, it can become something horrible and be used as a weapon,” he stated.
Charles acknowledged that established projects like Cardano or XRP would likely be shielded by exception clauses. The real problem, he argued, is that the law would force all future American crypto innovation to operate from abroad, destroying the domestic ecosystem.
A Fractured Industry Faces Congress
Charles’s position stands in contrast to that of Brad Garlinghouse, CEO of Ripple, who estimates there is a 90% chance the bill becomes law before April and maintains that “clarity beats chaos.” David Schwartz, Ripple’s CTO, commented on X that “a suboptimal law is better than no law at all.”
Hoskinson rejected that reasoning categorically. Passing a flawed law, he argued, would be tantamount to legally enshrining everything former SEC Chair Gary Gensler tried to impose on the industry. The CLARITY Act passed the House in 2025 but remains stalled in the Senate, and no agreement has been reached so far.
