Cardano founder Charles Hoskinson says the Digital Asset Market CLARITY Act could end up giving established tokens like XRP a cleaner regulatory lane, although the bill would set a damaging default rule for the next generation of US-based crypto projects.

During a recent livestream, Hoskinson complained that the framework treats everything as a security first. This could then force projects to fight their way out of that label through a process he says the SEC could easily weaponize. In the same breath, he suggested XRP may be among the assets that get grandfathered into safer treatment under the bill’s structure

The Clarity Act is a proposed piece of US legislation designed to create a regulatory framework for cryptocurrencies and digital assets. This bill has been advancing with US lawmakers and there are claims that it may be passed anytime in April. In a most recent livestream on YouTube, the Cardano co-founder interpreted the CLARITY Act as a line between legacy networks and future launches.

Interestingly, Hoskinson noted the Digital Asset Market CLARITY Act could end up sparing established tokens like XRP and maybe Cardano from being treated as securities, essentially rolling XRP into a grandfather status and placing it among the networks most likely to benefit from the bill’s structure.

However, the same bill would leave decentralized finance with no real protections or path forward. He said “there’s nothing in this for Defi; nothing,” then pointed to Uniswap and prediction markets as examples of what he believes the legislation ignores.

He also used the stablecoin yield fight as proof that important parts of crypto’s products still don’t have a seat at the table. In his words, even Coinbase CEO Brian Armstrong “can’t even get his yield-bearing stablecoins.” This is related to stablecoin yield regulations included in the Act.

The comments in this livestream did not come out of nowhere. Hoskinson has been publicly negative on the CLARITY Act for the past few weeks, calling it a bill that looks like progress on paper but leaves loopholes for regulators to keep projects trapped under securities treatment. 

The friction has also spilled into a high-profile industry divide because Ripple CEO Brad Garlinghouse has taken the opposite posture in public comments, pushing the idea that the sector should accept a workable framework and then keep improving it through amendments. 

Notably, Garlinghouse’s comments can be seen as confident the bill can pass on a fast timeline, even as leaders like Hoskinson call it flawed. Another industry name who has expressed concern is Coinbase CEO Brian Armstrong, who noted that the bill is giving way for banks to come in and get to do regulatory capture to ban their competition.

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