Cardano founder Charles Hoskinson has expressed significant skepticism regarding the proposed U.S. Digital Asset Market CLARITY Act. He predicts that even if the legislation passes, the subsequent rulemaking process could stretch out for as long as 15 years, leading to prolonged industry uncertainty.

Political Hostility and Regulatory Uncertainty

Hoskinson argued that the political landscape surrounding cryptocurrency has become increasingly hostile, particularly among Democrats following the collapse of FTX. He stated that this shift has created a regulatory environment that defaults to treating new crypto projects as securities.

The FTX Aftermath

The failure of FTX significantly damaged public perception, according to Hoskinson. He noted that FTX’s mainstream visibility, including sponsorships like Tom Brady, amplified the negative impact on the industry’s image.

“The challenge was that FTX blew up, and then the Democrats went from crypto-curious to crypto-hostile,” Hoskinson told CoinDesk. He believes this change led to a sustained campaign that harmed the industry’s standing with key political figures.

Structural Disadvantages for New Projects

A major concern for Hoskinson is the bill’s structure, which he believes benefits existing, established cryptocurrencies. He fears new projects will be perpetually trapped in the security classification.

“I’m not happy with all new projects starting as a security by default,” he stated. Hoskinson warned that parliamentary procedures could allow regulators, like the SEC, to indefinitely delay graduating assets from security status to non-security status.

Entrenching Established Players

This dynamic, he contends, ensures that established tokens will thrive while stifling innovation. “Cardano is going to do great, XRP is going to do great, Ethereum is going to do great,” he observed. However, he added, “But future projects can’t compete. They can never grow in ownership and liquidity.”

Critique of the CLARITY Act’s Focus

Hoskinson labeled the current legislative effort an overly complex, U.S.-centric “Frankenstein’s monster.” He criticized lawmakers for focusing on marginal issues while ignoring broader global regulatory alignment.

He suggested the debate is misdirected, focusing too heavily on stablecoin yield. “It’s like setting the house on fire and then complaining about the length of the grass,” he remarked, calling the focus immaterial to the core problems.

Lack of Global Perspective

The Cardano founder emphasized that policymakers lack the technical expertise needed for effective regulation. Furthermore, he criticized the failure to globalize the framework, pointing to frameworks in Europe (MiCA), Abu Dhabi, Japan, and Singapore.

Without international coordination, U.S. rules risk incompatibility with global markets, resulting in a non-interoperable “U.S. standard.”

Political Polarization and Future Outlook

Hoskinson noted that political dynamics have eroded bipartisan support for crypto legislation. He suggested that the industry’s embrace of Donald Trump turned crypto into a partisan issue, with Democrats using messaging that equates “Crypto equals corruption equals Trump.”

He warned that the law itself could be “weaponized” depending on the administration in power. “If the Democrats win in 2029, there are avenues in the existing text that they can use to weaponize the CLARITY Act,” he cautioned.

Ultimately, Hoskinson views the current situation as a missed opportunity for constructive, bipartisan legislation, predicting continued uncertainty for the industry in the near term.