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The founder of Cardano, Charles Hoskinson, has criticized the American legislative proposal titled “On the Transparency of the Digital Asset Market” (CLARITY Act), asserting that the document categorizes nearly all digital assets as securities.
According to Hoskinson, this is a “garbage bill” intended to delineate the powers of financial regulators, granting the U.S. Securities and Exchange Commission (SEC) the authority to suppress the crypto industry. He claims that the bill, in its current form, creates a trap that the SEC, which has previously shown hostility towards cryptocurrencies, could exploit for its own benefit.
Any new crypto project would automatically fall under the SEC’s jurisdiction as an investment contract, placing the burden of proof on developers to demonstrate that the asset is not a security, thereby inherently putting them at a disadvantage against the regulator, the businessman explained.
Hoskinson contends that the transition outlined in the bill from classifying cryptocurrencies as securities to categorizing them as digital commodities regulated by the U.S. Commodity Futures Trading Commission (CFTC) represents a “bureaucratic minefield.”
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The entrepreneur suggested that the SEC might employ various strategies to target crypto companies in order to maintain the classification of digital assets as securities. For instance, it could demand evidence of “sufficient decentralization,” although no one knows what number of validators or nodes would be deemed adequate. Alternatively, it could apply the Howey test to crypto assets to determine if they qualify as securities. The regulator might argue that a token’s price increase is due to the efforts of its development team, thus classifying it as a security, he elaborated.
Hoskinson expressed concern that the regulator could always find a reason to keep crypto projects under its control. He noted that even if established industry players could operate in the U.S. under previous regulations, many crypto startups would likely launch overseas due to the new legislation, hindering the industry’s full development.
The CLARITY Act was passed by the House of Representatives in 2025 but has stalled in the Senate. The White House set a deadline of March 1 for stakeholders to resolve their differences, but that date has passed without a compromise being reached.
Previously, Hoskinson stated that under Donald Trump’s administration, the American crypto industry faced a more challenging situation than it did under the previous president, Joe Biden.
