Cardano's Hoskinson: Clarity Act risks locking new tokens as securities, entrenching incumbents

Cardano founder Charles Hoskinson is warning the crypto industry to take a much closer look at H.R. 3633 — the market-structure bill often discussed as the Clarity Act — arguing that, as written, it could entrench legacy networks while locking new U.S. token projects into securities status.

In a March 2 video, Hoskinson directly challenged Ripple CEO Brad Garlinghouse’s argument that a flawed bill is still better than no bill. “A bad bill is not better than no bill,” he said, arguing the legislation should be built from first principles: don’t make every token a security by default, and instead modernize securities laws to accommodate blockchain-native assets.

What worries Hoskinson most is the bill’s proposed sequencing: treat newly issued digital assets as securities initially, and force them to persuade the SEC that they’ve “graduated” to commodity status only after their networks become sufficiently decentralized. In his view that framework would have categorized early tokens such as XRP, Cardano and Ethereum as securities at launch. While older projects might be grandfathered, future teams would face a regulatory maze from day one.

Hoskinson repeatedly asked a blunt practical question: if a token starts life as a security, what prevents the SEC from keeping it classified that way indefinitely? He framed the concern in procedural terms and pointed to multiple “attack vectors” rulemaking could open up, including:
– Administrative stalling: the SEC could repeatedly issue deficiency notices or exploit filing completeness rules to delay approvals.
– Vague standards like “common control”: undefined language could let regulators treat normal open‑source coordination as evidence of centralized management.
– Impossible decentralization proofs: requiring issuers to identify beneficial owners behind pseudonymous wallets or comply with yet‑to‑exist categories could be unworkable.

Taken together, Hoskinson argued, the bill could look tidy on the page but be punitive in practice — effectively codifying much of the enforcement approach Chair Gary Gensler has pursued, enabling the SEC to “arbitrarily and capriciously” block new projects, and exposing DeFi developers to personal liability.

He also suggested the political impasse around the bill isn’t primarily about developer protections or the SEC–CFTC split, but about stablecoin yield — meaning a market-structure bill sold as broad reform may miss the industry’s current core issues.

As an alternative, Hoskinson urged a principles‑based rewrite: modernize securities law itself, create blockchain-native disclosure frameworks, explicitly protect developers and DeFi activity, and limit regulator discretion in subsequent rulemaking. Otherwise, he warned, the likely outcome is predictable: incumbent networks remain, while the next generation of U.S.-based projects build offshore first and only attempt a U.S. return years later.

At press time, Cardano traded at $0.2692.

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