Cardano’s Hoskinson Warns CLARITY Act May Prolong Crypto Uncertainty

Cardano founder Charles Hoskinson has warned that the U.S. ‘Digital Asset Market Clarity Act’ (the ‘CLARITY Act’) could become a long-term constraint on the crypto sector, arguing it may entrench regulatory uncertainty for years while leaving the industry vulnerable to shifting political priorities.

The bill, now being debated in the U.S. Congress, aims to draw clearer lines between digital assets treated as ‘securities’ and those treated as ‘commodities,’ assigning oversight primarily to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), respectively. The legislation passed the House in July last year but remains pending in the Senate, underscoring how difficult it has been for lawmakers to align on an enduring market structure after a series of high-profile industry failures.

Hoskinson’s core critique is that the proposed framework effectively sets a default assumption that new crypto projects are ‘securities.’ In his view, that starting point matters: once an asset is categorized as a security, the path to reclassification could be narrow in practice, and compliance expectations could resemble those applied to public companies—an expensive and time-consuming burden for early-stage teams.

“If you start everything as a security, you are shaping the market,” Hoskinson said in comments shared publicly, adding that smaller startups could struggle to build ‘liquidity’ and sustain growth under a heavier disclosure and registration regime. He suggested that the asymmetry could benefit established, widely distributed networks—citing Cardano, XRP, and Ethereum (ETH) as examples—while raising the risk of market concentration by making it harder for newcomers to compete on equal footing.

Hoskinson also flagged what he described as a slow-moving implementation risk. Even if the CLARITY Act were enacted, he said, the process of drafting detailed rules, coordinating agency roles, and translating the statute into enforceable guidance could take as long as 15 years. For market participants, that would extend the very uncertainty the legislation is designed to resolve, leaving token issuers, exchanges, and institutional counterparts operating under evolving interpretations.

He further argued that enforcement intensity and interpretive posture could vary significantly depending on the administration in power, making the regime susceptible to political cycles. The implication is that a formal framework might not automatically produce consistent outcomes if policy priorities shift or if agencies recalibrate their approach based on directives from Washington.

Delays in the bill’s progress are widely tied to a hardened regulatory climate after the 2021 collapse of FTX, which reshaped congressional and public attitudes toward crypto oversight. Hoskinson has pointed to that episode as a catalyst for more rigid policymaking across party lines. He also highlighted ongoing disagreement between banks and crypto firms over stablecoin revenue models as another factor contributing to legislative gridlock—a dispute that intersects with broader debates over who captures payment-related ‘float’ and fee income in a tokenized dollar economy.

Separately, Hoskinson used the same period to spotlight execution on infrastructure within the Cardano ecosystem, formally confirming the March 30 launch of the ‘Midnight’ mainnet, a privacy-focused blockchain designed to support selective disclosure. The network is operating with an average block time of roughly six seconds and has produced more than 163,000 blocks, he said.

Midnight is currently running under a federated validator setup described as a ‘guard’ model, with participating entities including Google Cloud, MoneyGram, Worldpay, Bullish, Vodafone Pairpoint, eToro, and Blockdaemon. Hoskinson said the design is intended to decentralize progressively over time, moving from a more controlled phase to a broader validator set as the network matures.

Technically, Midnight is positioned around a hybrid approach to public and private data, using device-based zero-knowledge proofs (ZK proofs) to enable users to reveal specific information without disclosing underlying private data in full. Its economic model separates the NIGHT token from DUST, a resource used for transaction processing—an attempt to decouple value capture from operational throughput in a way that proponents argue can improve usability and predictability.

Hoskinson’s comments arrive at a moment when U.S. market structure policy is still unsettled, and the industry remains sensitive to how quickly Congress can move from broad principles to workable rules. While he framed the CLARITY Act as potentially locking in years of uncertainty for smaller innovators, he also emphasized that the long-term viability of new networks—including Midnight—will ultimately be tested by real demand and sustained usage rather than headlines or regulatory narratives.