Charles Hoskinson, founder of the Cardano blockchain, has launched a fierce criticism of efforts to strip Section 604 from the proposed Digital Asset Market Clarity Act (CLARITY Act). He described the potential removal as "insanity" and a "dystopian nightmare," after the National Fraternal Order of Police urged U.S. senators to reconsider the provision.
The controversy centers on whether open-source crypto developers and infrastructure providers should face legal exposure for crimes committed by third parties using their code. In a letter to Senators Tim Scott and Elizabeth Warren, the police union argued that Section 604 would weaken law enforcement's ability to pursue financial crimes involving cryptocurrency by exempting "non-controlling developers" from money transmitter liability.
Hoskinson rejected that argument as fundamentally dangerous. He asserted that holding developers responsible for unrelated third-party actions would effectively destroy open-source software by forcing innovation into closed, permissioned systems. "The insanity of their position is beyond any sense of reason," he wrote. "You develop open source software, you give it to the world, someone else who you've never met does something with it without your knowledge or consent, and then you're forever liable for THEIR ACTIONS."
He compared the logic to blaming authors for crimes inspired by fictional books, highlighting what he sees as an absurd assignment of liability. The debate reflects a broader fight in Washington over how to regulate crypto infrastructure. Supporters of Section 604 argue that publishing code should not automatically make someone a financial intermediary, while opponents fear loopholes for criminals using decentralized platforms.
The outcome could have major consequences for decentralized finance and open-source development in the United States. If stricter liability standards prevail, developers may relocate innovation offshore, costing the U.S. leadership in blockchain technology. Cardano, which relies on its open-source community, is directly impacted by this legislative battle.
