Cardano founder Charles Hoskinson has issued a stark warning about the potential consequences of the proposed Digital Asset Market Clarity Act of 2025 (H.R. 3633). During a recent livestream, Hoskinson argued that the legislation, which has already passed the U.S. House of Representatives and is now under Senate consideration, establishes a damaging default rule for the crypto industry.
The core of Hoskinson's critique is the bill's presumption that all newly launched digital assets begin as securities if they are issued by a founding team to fund network development. "Everything starts as a security," Hoskinson stated. "XRP starts as a security. Cardano starts as a security. Ethereum starts as a security." Under the proposed framework, a token could only transition to commodity status—and shift oversight from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC)—if its underlying blockchain becomes "sufficiently decentralized."
Hoskinson posed a direct question to the XRP community, asking if, under the bill's current text, XRP would have been considered a security at its launch in 2012. He believes the answer is yes, due to the XRP Ledger's early development and token distribution being linked to its founding team, which later formed Ripple Labs. This structure, he argues, would not have met the bill's definition of a "mature blockchain system" at launch.
While the bill might spare established tokens like XRP and potentially Cardano by granting them a "grandfathered" status into safer treatment, Hoskinson warns it creates a perilous path for future projects. He expressed concern that the SEC could weaponize the transition process, imposing additional disclosure requirements or procedural hurdles to delay or deny a project's move away from securities classification. "You start as a security, and then you have to go to the SEC and say, 'I don't think I'm a security anymore,'" he explained.
This stance puts Hoskinson at odds with other industry leaders like Ripple CEO Brad Garlinghouse, who has advocated for passing the legislation as a step toward regulatory clarity, even if imperfect, with plans to improve it later via amendments. Coinbase CEO Brian Armstrong has also expressed concerns, suggesting the bill could enable regulatory capture by traditional banks.
Furthermore, Hoskinson criticized the bill for offering "nothing" for the DeFi sector, citing examples like Uniswap and prediction markets, and highlighted ongoing disputes over stablecoin yield regulations as evidence that key crypto innovations lack a clear path forward under the proposed law.
