* Cardano founder Charles Hoskinson argues the CLARITY Act is “horrible for the industry,” despite being beneficial for established projects like Cardano, XRP, and Ethereum.
* He warns the bill creates a “security trap,” making it impossible for new crypto projects in the U.S. to achieve non-security status and attract investment.
* Hoskinson believes the current ambiguity in crypto law is what allowed major projects to grow, a pathway the new act would effectively close.
Cardano founder Charles Hoskinson stated on April 27 that the Digital Asset Market CLARITY Act is a "bill for the incumbents" that would stifle innovation, even as it benefits the top three digital assets by market cap.
"It’s horrible for the industry," Hoskinson said in a recent interview regarding the legislation. "Cardano will get a pass. XRP will get a pass. Ethereum will get a pass. We’re already commodities under the mature blockchain standard. So it’s good for me."
Hoskinson’s primary criticism is that the bill, while providing a pathway for existing large-scale projects to be classified as commodities, creates an inescapable "security trap" for new ones. To achieve the "mature blockchain" standard under the act, a project needs broad distribution, liquidity, and community growth—metrics that are impossible to achieve without exchange listings and initial investment, which are precluded by an initial security classification.
The founder argues that the very ambiguity in current U.S. law that the industry often criticizes is what allowed projects like Ripple, Ethereum, and Cardano to emerge. By removing that ambiguity, the CLARITY Act would prevent the next generation of projects from following the same path. "Under this law, if Ripple was founded today, XRP would be a security," Hoskinson stated, highlighting the paradoxical situation where communities are supporting a bill that would have prevented their own existence.
The CLARITY Act, which is advancing toward Senate debate, aims to create a comprehensive regulatory framework for digital assets, defining oversight for everything from token classification to DeFi and stablecoins. Proponents see it as a way to end the "regulation by enforcement" era that has created uncertainty for years.
However, Hoskinson contends the legislation serves to cement the market position of the largest players. He argues that Cardano, XRP, and Ethereum would likely receive commodity status under the proposed "mature blockchain" standard because they already meet the decentralization and distribution requirements. While this is a positive outcome for their holders, he calls it a disastrous one for American innovation in the sector.
Beyond the immediate impact on new projects, Hoskinson warned of the longer-term political risks. He suggested that the framework established by the CLARITY Act could be "weaponized" by future administrations hostile to the crypto industry.
"When the Democrats weaponise it, they can structure it in a way that every new project will always be a security," he warned. This would effectively give regulators the legal backing to halt new protocol development in the U.S., a risk he believes the industry is underestimating in its push for short-term clarity.
This article is for informational purposes only and does not constitute investment advice.