Cardano-founder Charles Hoskinson has expressed that the Digital Asset Market CLARITY Act may cause more damage than good for new crypto projects in the U.S.
While the new legislation is intended to provide a better framework for the crypto industry, the Cardano founder believes that it could actually work against new projects and in favor of the big ones.
Hoskinson made those remarks as lawmakers continue to negotiate the bill in Congress. Debate around the measure has focused on stablecoin yield, decentralized finance, and digital asset classification.
According to him, the bigger issue is whether the law leaves enough room for new projects to compete.
Hoskinson says the bill could favor older networks
Hoskinson argued that the current draft may give an edge to crypto networks that already have scale, liquidity, and market recognition. He named Cardano, XRP, and Ethereum as examples of projects that may be better placed under the proposed framework.
He argued that newer tokens may face a harder path from the start. Rather than entering the market with room to build, they could face strict rules before they gain traction.
He told CoinDesk that this structure may limit their ability to compete with more established assets. One of his main objections centered on the treatment of new tokens as securities by default.
“I’m not happy with all new projects starting as a security by default,” he stated.
He presented that approach as a major barrier for builders trying to launch and expand new networks.
Hoskinson also argued that once a project falls into that category, it may be difficult to move out of it. He noted that regulators could rely on long procedures to delay decisions.
Rulemaking may take years after passage
Hoskinson also questioned whether the bill would bring quick clarity even if Congress passes it. He noted that approval would only begin a longer process in which regulators write and enforce detailed rules.
“Even if it does get passed, it’s going to take many years of rulemaking.” He predicted that the process could turn into “15 years of rulemaking and slow rolling,” he told CoinDesk.
He also raised concerns about how future administrations may handle the legislation. In his view, shifts in political power could change how the law is used and who comes under pressure.
Hoskinson stated, “It’s also unlikely to survive this administration.”
As per the crypto mogul, if Democrats return to power in 2029, parts of the existing text could be used against the industry. He framed that risk as one of the clearest weaknesses in the bill.
This concern is a symptom of a broader concern in crypto legislation. The concern is not only about the legislation itself but also about how regulators will interpret it over time. Hoskinson claimed that this is the central problem in the CLARITY Act debate.
FTX collapse changed the political climate
Hoskinson traced the current mood in Washington back to the collapse of FTX. He recalled a time when crypto policy had broader bipartisan support and lawmakers appeared more open to working on market structure rules.
“Back then, we had relatively good bipartisan support,” he said.
That changed after FTX failed and triggered a sharp backlash. He argued that the fallout pushed many Democrats into a more hostile stance toward the sector.
He also noted that FTX had become a major public brand before its collapse. Because of that visibility, he argued, the damage reached far beyond the company itself and shaped how the public and lawmakers viewed crypto.
Hoskinson remarked, “FTX was sponsoring Tom Brady. It was a very mainstream project.” He added that the exchange’s failure “really damaged the public perception of crypto.”
He also linked the current divide to later political developments. Many in the crypto industry moved closer to President Donald Trump after the SEC under Gary Gensler took a tougher enforcement approach. Hoskinson argued that this made the issue even more partisan in Washington.
“The crypto industry strongly embraced Trump. It was less philosophical and more existential,” he explained.
He also argued that crypto is now harder to discuss as a bipartisan issue, which complicates efforts to move legislation through Congress.
Focus on stablecoins may miss the bigger issue
Hoskinson also criticized the way discussion around the CLARITY Act has developed. He argued that too much attention has gone to whether stablecoins should pay yield, while larger questions about market access and project classification have received less attention.
He stated, “The only issue that people seem to have is whether stablecoins pay yield or not.” He argued that this narrow focus leaves more basic questions unresolved, especially for projects that do not already have scale.
He also described the bill as too broad and too difficult to manage. In his view, lawmakers are trying to solve too many issues in one package, which could leave the final product hard to apply and harder to defend over time.
“If you try to do everything in one piece of legislation, you’re going to end up getting kind of a Frankenstein’s monster,” Hoskinson said.
He also argued that rulemaking often happens without enough technical expertise in the room.
Another part of his criticism focused on the bill’s U.S.-only approach. He stressed that crypto is global by nature, but the proposed framework does not do enough to match standards developing in other regions.
He named Europe, Abu Dhabi, Japan, and Singapore as examples of places that the United States should look at more closely. Without that coordination, he said, American rules may drift away from those of other large markets. That could make things more difficult for projects that operate across borders.
The bill still faces open questions
The CLARITY Act remains under negotiation, and lawmakers have not yet taken it to a full Senate vote. Talks continue over stablecoin yield, decentralized finance, and other sticking points that have slowed progress.
Hoskinson described the current moment as a missed opportunity to build a more workable bipartisan framework. He argued that there was once a better opening for agreement, but that path has narrowed as political divisions have grown.
He now appears doubtful that the bill will pass in a form that addresses the concerns he raised. Even if it advances, he expects more debate over how it will work and who it will favor.
In addition, on March 26, Coinbase also renewed its support for the CLARITY Act as debate over the latest draft continued. As we reported, the exchange said the new text includes compromises aimed at easing banks’ concerns over stablecoin yield, one of the issues that has slowed progress on the bill.
The firm’s comments came as US regulators and lawmakers were under mounting pressure to advance the delayed legislation. This effort has gained pace under President Donald Trump’s administration, which has urged a quicker response to crypto regulation.