Charles Hoskinson not a fan of CLARITY Act, warns of 'weaponization' by future lawmakers

The Cardano founder says post-FTX politics, flawed design and a narrow U.S.-only approach risk stifling new crypto projects while benefiting established players

What to know:

• Cardano founder Charles Hoskinson warned that the proposed U.S. Digital Asset Market CLARITY Act could take more than a decade to implement, be weaponized by shifting political powers and ultimately fail to survive future administrations.
• He argued that post-FTX politics, especially among Democrats, have turned increasingly hostile to crypto, creating a regulatory environment that treats new projects as securities by default and entrenches advantages for established tokens like Cardano, XRP and Ethereum.
• Hoskinson criticized the legislation as an overly complex, domestically focused "Frankenstein's monster" that ignores global regulatory frameworks and focuses on marginal issues like stablecoin yield while leaving the industry in prolonged uncertainty.

Cardano and Midnight Founder Charles Hoskinson said proposed U.S. crypto legislation could take more than a decade to implement, fail to survive political change and structurally disadvantage new entrants while benefiting established cryptocurrencies.

The Digital Asset Market CLARITY Act is still being negotiated in Congress, with lawmakers circulating updated text and trying to close final gaps. While a compromise on stablecoin yield appears close, other sticking points, including decentralized finance and Democratic political demands, remain unresolved, leaving the bill short of a full Senate vote for now.

“Even if it does get passed, it’s going to take many years of rulemaking,” he told CoinDesk, warning the process could stretch to “15 years of rulemaking and slow rolling.” He also warned that the politicians could weaponize the law depending on who is in power, Democrats or Republicans.

“It’s also unlikely to survive this administration,” Hoskinson said. “If the Democrats win in 2029, there are avenues in the existing text that they can use to weaponize the CLARITY Act,"

FTX’s collapse turned Democrats hostile

Hoskinson said the current regulatory environment is a direct result of the collapse of the Sam Bankman-Fried’s crypto exchange FTX, which he firmly believes flipped how Democrats viewed crypto from good to sour.

“Back then, we had relatively good bipartisan support,” he said, referring to earlier legislative efforts.

“The challenge was that FTX blew up, and then the Democrats went from crypto-curious to crypto-hostile, and then they began a three-year campaign and really damaged the industry.”

The fallout created political risk for lawmakers.

“It said, hang on, if we take pictures with these guys, we may be taking pictures with people in prison next year. That’s bad for us,” Hoskinson said, adding that FTX’s prominence amplified the damage.

“FTX was sponsoring Tom Brady. It was a very mainstream project,” Hoskinson said. “It really damaged the public perception of crypto.”

A regulatory trap for newcomers

Hoskinson said one of his biggest concerns with the current legislative approach is that it treats new crypto projects as securities by default. “I’m not happy with all new projects starting as a security by default.”

Under the current structure, projects could struggle to ever exit that classification, Hoskinson said. “There are all kinds of parliamentary procedures that they can use to basically slow down any approval,” he said. “The SEC has no incentive to ever graduate anything from being a security to a non-security.”

He said the result is a system that favors existing cryptocurrencies while making it harder for new ones to emerge. “Cardano is going to do great, XRP is going to do great, Ethereum is going to do great,” he said. “But future projects can’t compete. They can never grow in ownership and liquidity. It’s effectively doing an IPO, and it’s absurd for that.”

Debate focused on the wrong problem

Hoskinson also criticized the current industry debate around the legislation, saying it is centered on less important issues. “The only issue that people seem to have is whether stablecoins pay yield or not,” he said. “It’s like setting the house on fire and then complaining about the length of the grass. It’s so immaterial to the root of where we got here.”

More broadly, Hoskinson described the legislation as overly complex and poorly constructed.

“If you try to do everything in one piece of legislation, you’re going to end up getting kind of a Frankenstein’s monster,” he said. And, more importantly, policymakers lack the technical expertise to regulate crypto effectively. “Rulemaking has no technical people in the room.”

Driven by politics, not policy

Hoskinson said political dynamics have made bipartisan cooperation increasingly difficult.

“The crypto industry strongly embraced Trump. It was less philosophical and more existential,” he said, pointing to enforcement actions under former Securities and Exchange Commission (SEC) Chair Gary Gensler.

At the same time, he said crypto has become politically polarized. “Trump destroyed any concept of bipartisanship. It turned crypto into a partisan conversation.”

He pointed to messaging from Democrats framing crypto negatively. “They’re talking points. Crypto equals corruption equals Trump.” The existing dynamic makes it difficult for lawmakers to support legislation publicly while campaigning against the industry, he stated.

Domestic approach to a global industry

Hoskinson said lawmakers have failed to consider that crypto is decentralized and, therefore, globalized in nature. However, there’s no attempt to globalize the regulatory framework, he said.

He believes policymakers should be aligning with frameworks in Europe, the Middle East and Asia. “You have to look at MiCA, Abu Dhabi, Japan, Singapore, and say, okay, what are they doing?”

The Cardano founder said that without that coordination, U.S. rules could become incompatible with global markets. “You’ll end up having a U.S. standard, but it won’t be compatible with the European standard.”

‘We almost had a window’

Hoskinson said he views the current situation as a missed opportunity to build workable, bipartisan legislation. “We almost had a window.” However, he now believes the crypto industry will face uncertainty in the near future, explaining that everyone seems to be finding something they don’t like.

“And now I don’t believe it will pass, and even if it does…” he concluded.

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