Cardano founder Charles Hoskinson is encouraging the crypto industry to take a closer look at HR 3633, arguing that the market structure bill could lock future US token projects into securities status rather than providing clarity to control the promise of their sponsors. His criticism goes beyond the process: Hoskinson says the bill, as written, would protect legacy networks while making it more difficult for new crypto projects to start and grow within the United States.
Cardano Founder Issues Strong Warning
In a video published on March 2, the founder of Cardano developed this argument in part as a direct response to Ripple CEO Brad Garlinghouse’s opinion that a flawed bill is still preferable to no bill at all. Hoskinson denied that. “Bad credit is better than no credit,” he said. “You start with a policy-based approach. You don’t automatically make everything secure, and you develop advanced security rules so that’s not so bad.”
His main objection is that the Clarity Act would treat newly launched digital assets as securities first, and then require them to convince the SEC that they qualify for “graduation” to asset status once their networks are sufficiently decentralized. In Hoskinson’s reading, that framework would take over XRP, Cardano and Ethereum upon launch. The difference, he said, is that old networks can eventually be established, while future projects will face regulatory issues from day one.
Hoskinson repeatedly returned to the same question: what, in practice, prevents the SEC from keeping a token classified as a security for how long? “If it starts as collateral, what’s stopping them from keeping it as collateral forever?” he asked. “And we are really sure that we can trust that in taking the law that will happen with people who have not been appointed by the agencies that have destroyed the last four. [expletive] years accusing everyone and putting everyone in jail?”
From there, he laid out a series of what he called “attack vectors” that the controversial SEC could use in the rulemaking. One involved delays in filing procedures, where the agency could end up resetting the clock with notices of deficiency. Another focus on the bill’s undefined administration is “general control,” which he said would allow regulators to interpret open source communications themselves as evidence of centralized control.
He also argued that proving the expansion of jurisdictions might not be possible if issuers had to identify beneficial owners in all anonymous wallet systems or rely on compliance clauses that the SEC has not yet implemented.
The broad point was that this bill may look effective in law but it is punishable in implementation. “The bad bill enacts everything that Gary Gensler was trying to do to the industry,” Hoskinson said. “The bad bill through legislation allows the SEC to arbitrarily and recklessly kill every new project in the United States. The bad bill exposes all DeFi developers to personal liability.”
He also pointed out that the current political battle in Washington is not compatible with the structure of the bill. According to Hoskinson, the real catch is the stablecoin yield, not developer protection, DeFi inclusion or the SEC-CFTC classification. In his words, that leaves the industry in a strange place: a bill marketed as a reform of the market structure, but one that “doesn’t get to the core of what’s happening in the industry right now.”
Hoskinson’s other option is a rules-based rewrite that modernizes securities law itself, creates blockchain-native disclosure routes, explicitly protects developers and DeFi, and limits how much discretionary controls can use in later rulemaking. If not, he warned, the practical result could be simple: established networks survive, while the next generation of US crypto projects build offshore first and only try to enter the American market many years later.
At press time, Cardano traded at $0.2692.
Featured image from YouTube, chart from TradingView.com
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