Charles Hoskinson, founder of Cardano and Midnight projects, stated that the implementation of the Digital Asset Market CLARITY Act, which is being discussed in the USA, may take many years and in its current form, it may give an advantage to well-established cryptocurrencies in the sector and put new initiatives in a difficult situation. Known as one of the leading names in the cryptocurrency industry, Hoskinson was previously among the founders of Ethereum and carried out important work on blockchain technology.
CLARITY Act Draft and Its Impact on the Sector
Despite the changes made to the Digital Asset Market CLARITY Act, which is currently being discussed in the US Congress, no agreement was reached on basic issues such as decentralized finance. Currently, the bill has not reached the stage of being put to a vote in the Senate. Charles Hoskinson points out that even if the law is accepted, the regulatory process may take up to 15 years.
Hoskinson stated that the current political environment could affect the fate of the bill. He mentioned that there is a possibility that Democratic or Republican administrations may make changes to the law in line with their interests. In this respect, the future of the law may change depending on political developments.
He largely associates the current regulations in the cryptocurrency market with the collapse of the FTX exchange. According to him, after the bankruptcy of FTX, especially the Democrats’ approach to the sector changed negatively and this event formed the core of the new regulations.
The Structure of Regulations and the Concerns It Creates in the Industry
Hoskinson is of the opinion that the prepared regulation’s classification of new cryptocurrency projects as securities by default will cause serious problems. He states that under the current law, it may be almost impossible for new projects to get out of this status, especially since the US Securities and Exchange Commission (SEC) does not have any incentives in this regard. He stated that in such an environment, well-established projects will come to the fore, while new initiatives will have difficulty growing.
“Cardano is in a good position, XRP and Ethereum will also have an advantage. But future projects cannot compete and reach sufficient liquidity,” he evaluates.
Emphasizing that the discussions in the sector mostly focus on secondary topics, Hoskinson thinks that issues such as stablecoin returns overshadow the main regulatory problems.
In addition, he states that the law is too complex and technically inadequate. He cites the lack of experts with technical knowledge in the decision-making process as one of the main problems.
Finally, he notes that political polarization in the US has blocked legal processes and made the crypto industry impervious to bipartisan support.
He adds that the current regulatory approach could cut the United States off from global markets. It points to the necessity of harmonization with legal frameworks, especially in Europe, the Middle East and Asia.
