U.S. lawmakers are still trying to sort out the Digital Asset Market CLARITY Act , a major effort to clean up the country's cryptocurrency rules.
The bill is meant to clearly divide oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), deciding which digital assets count as "securities" and which as "commodities".
While the House passed the bill last July, it has stalled in the Senate and is facing criticism from major parts of the crypto industry.
Related: Ripple CEO predicts new timeline for historic crypto legislation
'Security by default' concerns
Charles Hoskinson, Cardano and Midnight founder, is among those raising concerns about the bill's current structure. He argues that it treats all new crypto projects as securities by default.
According to Hoskinson, that approach could hurt smaller startups while benefiting more established networks like Cardano, XRP , and Ethereum .
"I'm not happy with all new projects starting as a security by default,"he told CoinDesk .
Hoskinson said that once a project is labeled a security, regulators have little incentive to reclassify it later. That could force new projects to follow strict rules similar to public companies, making it harder for them to grow or access liquidity.
He warned this could lead to "15 years of rulemaking and slow rolling"that could eventually be used as a political tool by whichever party is in power.
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Impact of the FTX fallout
The bill's lack of progress in the Senate is also tied to broader political concerns.
Hoskinson pointed to the 2021 collapse of FTX as a turning point. Before that, he said Democrats were "crypto-curious."
After the exchange failed, they became "crypto-hostile," leading to a multi-year crackdown that hurt the industry's reputation.
That shift has made some lawmakers, who once embraced the sector, more cautious about supporting crypto-related legislation .
"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.
At the same time, disagreements between the banking and crypto industries—especially over stablecoin rewards—have added to the delay and kept the bill in a stalemate.
For Hoskinson, the CLARITY Act in its current form does not offer a clear path forward. Instead, he sees it as creating a framework that future administrations could use to hold the industry back.
Related: Coinbase again reportedly rejects support for CLARITY Act
This story was originally published by TheStreet on Apr 1, 2026, where it first appeared in the Policy section. Add TheStreet as a Preferred Source by clicking here.
