Cardano Founder Warns U.S. CLARITY Act Could Take 15 Years To Impact Crypto And Hurt New Projects

Washington’s long-running effort to bring order to cryptocurrency rules is facing renewed scrutiny, as one of the industry’s most prominent voices warns the proposed framework could do more harm than good.

The Digital Asset Market CLARITY Act, designed to split oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission, remains stuck in the Senate despite passing the House last July.

While the bill aims to define whether digital assets are securities or commodities, critics argue the current structure could reshape the industry in unintended ways.

New Projects Treated As Securities By Default Raises Alarm

Charles Hoskinson, founder of Cardano, has taken particular issue with how the bill classifies emerging projects.

He said,

“I’m not happy with all new projects starting as a security by default.”

He believes this approach places early-stage crypto ventures under rules similar to public companies from day one, making it harder to grow, raise capital, or build liquidity.

In his view, once a project is labelled a security, there is little incentive for regulators to revisit that status.

He explained,

“There are all kinds of parliamentary procedures that they can use to basically slow down any approval.”

He added that regulators may never feel compelled to reclassify assets later.

Hoskinson warned this could create a system that favours established networks such as Ethereum and XRP, while locking out new entrants.

“Cardano is going to do great, XRP is going to do great, Ethereum is going to do great.”

He argued that future projects may struggle to compete under such constraints.

“They can never grow in ownership and liquidity. It’s effectively doing an IPO, and it’s absurd for that.”

Could Rulemaking Take Years To Deliver Real Clarity

Even if lawmakers manage to pass the bill, Hoskinson believes the real impact may be delayed far beyond expectations.

He pointed to the lengthy rulemaking process required after legislation is approved, where agencies must define and implement detailed regulations.

“Even if it does get passed, it’s going to take many years of rulemaking.”

He also warned that the process could stretch to “15 years of rulemaking and slow rolling.”

For crypto firms seeking immediate regulatory certainty, this timeline could extend the current period of ambiguity rather than resolve it.

FTX Collapse Still Shaping Political Attitudes

Hoskinson also linked the bill’s stalled progress to shifting political sentiment following the collapse of FTX.

“The challenge was that FTX blew up, and then the Democrats went from crypto-curious to crypto-hostile.”

According to him, the fallout has made lawmakers more cautious about publicly supporting the sector.

“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.”

He added that the exchange’s mainstream visibility amplified the damage.

“FTX was sponsoring Tom Brady. It was a very mainstream project… It really damaged the public perception of crypto.”

Political Risk And Long Term Uncertainty Loom Large

Beyond regulatory delays, Hoskinson warned the bill could become a political tool depending on which party is in power.

He argued that certain provisions could be “weaponized” by future administrations, allowing policymakers to target parts of the industry over time.

In his view, the legislation may struggle to survive political transitions, particularly if leadership changes in future election cycles.

The growing divide between political parties has also made bipartisan cooperation more difficult, turning crypto into a more polarised issue than before.

Industry Divisions Add To The Deadlock

The lack of consensus is not limited to Washington.

Disagreements within the crypto industry itself are also slowing progress.

Hoskinson accused Coinbase of opposing parts of the bill to protect revenue linked to stablecoin yields, particularly those tied to USDC reserves.

He suggested that debates have become overly focused on issues like yield, rather than deeper structural problems.

“The only issue that people seem to have is whether stablecoins pay yield or not. It’s like setting the house on fire and then complaining about the length of the grass.”

At the same time, others in the industry, including leaders at Ripple, have taken a more supportive stance, arguing that some regulatory clarity is better than none.

DeFi Developers And Innovation At Risk

Another major concern centres on how the bill could affect decentralised finance.

Hoskinson warned that proposed rules may expose developers to legal risks, even when they are not directly responsible for how their software is used.

He compared this to holding an author accountable for how readers interpret a book.

He also criticised the broader structure of the legislation, describing it as overly complex and too focused on domestic concerns, despite crypto being a global industry.

Without alignment with frameworks in regions such as Europe and Asia, he warned that US rules could become incompatible with international markets.

“If you try to do everything in one piece of legislation, you’re going to end up getting kind of a Frankenstein’s monster.”

A Missed Window For Clear And Balanced Regulation

Hoskinson believes the current moment reflects a missed opportunity to build a workable, balanced framework for digital assets.

Referring to the earlier bipartisan support has since faded, he said,

“We almost had a window.”

With negotiations still ongoing and key issues unresolved, the CLARITY Act remains in limbo, and even if it moves forward, the path to meaningful change may be far longer than many in the industry had hoped.