Cardano founder Charles Hoskinson has launched a scathing critique of the proposed U.S. crypto market structure legislation, the Digital Asset Market Clarity Act (H.R. 3633), labeling it a "horrific trash bill." In a detailed YouTube broadcast on March 3, Hoskinson argued the bill's core mechanism would classify nearly all newly created digital assets as securities by default, handing a "weaponized" Securities and Exchange Commission (SEC) the power to stifle the industry for years.
The bill's "security by default" framework is the center of Hoskinson's criticism. He asserted that under this structure, every new project—including XRP and Ethereum at their launches—would be classified as an "investment contract asset" under SEC jurisdiction. Hoskinson warned that the path for a project to graduate to a "digital commodity" regulated by the CFTC is a bureaucratic minefield, with several "attack vectors" where the SEC could exploit rulemaking to trap projects in security status indefinitely. These include impossible-to-prove decentralization standards and subjective "value attribution" tests.
"This is not a good bill," Hoskinson said. "Through rulemaking, it can become horrific and weaponized and it doesn't cover the core of what's going on in the industry right now." He stressed that while established projects like Cardano and XRP might be "grandfathered in," the legislation would force all future American crypto innovation to launch overseas, effectively killing the domestic industry.
The debate has exposed a deep rift within the crypto industry. Ripple CEO Brad Garlinghouse, who has predicted a high likelihood of the bill becoming law by April, champions it, arguing that "clarity beats chaos" and that the industry cannot let "perfection be the enemy of progress." Ripple CTO David Schwartz echoed this sentiment on social media, stating "a sub-optimal bill is better than no bill at all." Hoskinson countered this view, claiming a bad bill would enshrine into law every single thing former SEC Chair Gary Gensler was "trying to do to the industry."
The CLARITY Act passed the House in 2025 but has stalled in the Senate. A White House deadline for stakeholders to bridge differences passed on March 1 with no public compromise reported. The primary holdup is reportedly a fierce lobbying battle over stablecoin rewards, which the banking industry warned could trigger a massive exodus of deposits.
