Washington’s push for a federal crypto rulebook reignited a long-running industry debate over what “regulatory clarity” actually delivers and who it helps.
At the center of the debate is H.R. 3633, the Digital Asset Market Clarity Act of 2025, a bill that supporters present as a long-awaited replacement for years of regulation by enforcement.
The legislation is designed to clarify boundaries around digital assets, define oversight responsibilities, and establish a framework for how tokens and intermediaries are treated under federal law.
But as the bill moves through Washington, it is producing two sharply different readings of what happens next.
Cardano founder Charles Hoskinson has attacked the proposal as a “horrific, trash bill,” arguing that it would make new crypto projects securities by default and leave their fate in the hands of an SEC rulemaking process that future administrations could weaponize.
JPMorgan, by contrast, has argued that a market-structure law passed by midyear could become a meaningful catalyst for digital assets in the second half of 2026 by reducing legal uncertainty and making it easier for institutions to expand exposure.
The disagreement is not only about whether legislation is needed. It is about who benefits from the version now under debate, and who could be shut out by it.
A rulebook that promises CLARITY
The CLARITY Act is intended to replace a patchwork of lawsuits, enforcement actions, and contested interpretations with a more formal rulebook.
For large, regulated companies, that promise is attractive. A clear statute can reduce legal tail risk, give banks and brokerages a framework for compliance, and make it easier to build products around custody, trading, and tokenization.
That is the case JPMorgan is making. Its analysts argue that legislation drawing clearer lines could reshape crypto market structure by ending regulation by enforcement, encouraging tokenization, and creating conditions for broader institutional participation.
In practical terms, that could lower the hurdle for allocators that have been unwilling to add exposure while the legal treatment of digital assets remains unsettled.
The timing matters. If Congress were to pass the bill by midyear, banks, custodians, and brokerages would have time to translate the law into product planning and compliance pipelines before year-end.
That is why JPMorgan sees the legislation not simply as a legal milestone, but as a second-half flows story.
However, that argument is landing in a fragile market. Bitcoin has been trading well below prior highs, and risk appetite across much of the sector remains weak.
In that environment, a rulebook that expands the investable universe for institutions could matter more than it would in a euphoric market.
Why critics say the bill could narrow innovation
Hoskinson’s criticism is less about the need for legislation itself than about the structure of the legislation now under consideration.
His concern is that the bill could formalize a system in which many new crypto projects begin life under securities treatment and then must later convince regulators that they have evolved beyond it.
In that model, the issue would not be only whether a network has become decentralized in practice. It would also be whether the SEC agrees that the project has crossed whatever threshold the agency considers sufficient.
That is why Hoskinson has argued that this “regulatory clarity bill” is hostile. In his view, certainty is not automatically beneficial if the certainty being created imposes a burdensome starting point for new entrants.
According to him:
“A bad bill enshrines into law every single thing Gary Gensler was trying to do to the industry. A bad bill, through rulemaking, allows the SEC to arbitrarily and capriciously kill every new project in the United States. A bad bill exposes all DeFi developers to personal liability. A bad bill destroys all liquidity for the people who aren’t anointed by the government, which yes, right now is pro-crypto.”
Moreover, the broader warning is that the bill’s proposed system would replace ambiguity with a more rigid structure that favors established networks and heavily capitalized firms.
Hoskinson argued that older projects such as XRP, Cardano, and Ethereum could have been treated as securities under that kind of framework at inception.
In light of this, he suggested the real effect may not be felt most acutely by older networks, which could be better positioned to navigate whatever transition process emerges, but by future builders deciding where to launch the next generation of crypto projects.
He added:
“And also there’s nothing in this for DeFi. Nothing. Uniswap doesn’t get anything. Prediction markets don’t get anything. Armstrong can’t even get his yield-bearing stablecoins. This is not a good bill. Through rulemaking, it can become horrific and weaponized, and it doesn’t cover the core of what’s going on in the industry right now.”
That is the central innovation concern. If founders believe the United States will require an uncertain and potentially lengthy effort to move a network out of securities treatment, some may decide that launching offshore is more rational than building under a US regime they see as expensive, discretionary, and difficult to satisfy.
Under that view, the CLARITY Act could create a system that is safer for incumbents and more restrictive for new projects.
The Cardano founder argued that this would undercut one of the industry’s longstanding claims, that the United States should be a competitive jurisdiction for blockchain development rather than a place where the largest companies gain the most from legislation.
Stablecoin rewards have become the political choke point
Meanwhile, the bill’s current holdup in Washington is not only about abstract questions of decentralization or innovation.
It is also about stablecoins, and more specifically, whether stablecoin issuers or affiliated platforms should be allowed to offer rewards that resemble yield.
That fight has become one of the main choke points in negotiations. Efforts to bridge the divide between banks and crypto firms have so far failed to produce a settlement, and the disagreement has broader implications than a narrow dispute over product design.
Crypto firms want room to structure regulated reward programs around stablecoins such as USDC. Banks have pushed back because they view those products as a direct challenge to the deposit base that supports traditional lending and funding models.
The concern is straightforward. If consumers can earn 4% to 5% through stablecoin-linked rewards or economically similar arrangements while traditional savings accounts pay a fraction of that, deposit migration becomes a real risk.
That would not only affect competition between banks and crypto companies. It could also affect how monetary policy moves through the financial system if balances shift away from conventional bank deposits.
This is why the stablecoin debate has grown into more than a crypto issue. It is increasingly tied to questions of bank funding, financial stability, and monetary transmission.
That dynamic helps explain why the larger market-structure conversation has become harder to resolve, even when many participants broadly agree that the current regulatory framework is inadequate.
Meanwhile, there appears to be at least some convergence around one principle: stablecoin balances should not pay direct interest, as bank accounts do.
However, crypto firms continue to look for ways to offer economic returns through memberships, rewards, affiliated programs, or staking-like structures. Banks, meanwhile, see those efforts as attempts to recreate deposit competition outside the traditional regulatory perimeter.
That is one reason the legislative package has become so difficult to close. What began as a crypto market-structure bill is now also a fight about who gets to offer yield-like products, on what terms, and with what consequences for the broader financial system.
What could CLARITY Act passage mean for markets?
For investors, the bill may be best understood through scenarios rather than slogans about whether regulation is good or bad.
In the most constructive scenario, Congress passes the CLARITY Act by midyear, and implementation proves workable.
That would align with JPMorgan’s thesis. Legal uncertainty would decline, regulated US venues could broaden their offerings, and institutions would have a clearer basis for custody, trading, tokenization, and onboarding clients.
The immediate beneficiaries in that outcome would likely be firms already positioned to operate inside a regulated framework: exchanges, brokers, custodians, and tokenization platforms.
Those companies would gain from a clearer set of rules and from the ability to tell clients that federal law now defines the market more explicitly than before.
A second scenario is passage with strict limits on stablecoin rewards. That would still deliver clarity, but it could redirect demand for yield into adjacent products such as tokenized deposits, money market structures, or other regulated wrappers.
Some parts of decentralized finance could see temporary inflows from users seeking alternatives, although that could also bring more regulatory attention to any offering that starts to resemble deposit-taking.
A third scenario is a delay. That outcome would preserve uncertainty and keep the market operating under a system many in the industry say they want to escape.
However, delay would also support the critics’ argument that the United States is becoming a jurisdiction where only the safest and most established assets can thrive, while newer projects choose to form elsewhere.
The market effect of delay would probably not come through a single price shock. It would be expressed more gradually, through where founders build, where venture capital is deployed, and which jurisdictions attract the next wave of token launches and blockchain infrastructure.
The bigger question behind the bill
The CLARITY Act was supposed to settle a long-running argument over whether crypto needs a formal federal framework.
Instead, it has exposed a deeper disagreement over what the industry wants from clarity in the first place.
For banks, brokers, and large institutions, a clearer statute is attractive because it reduces legal ambiguity and creates a path for measured expansion.
For critics such as Hoskinson, the question is whether the framework now taking shape would lock the next generation of networks into a regulatory process controlled by an agency that may not apply the rules consistently.
That leaves Washington debating more than a crypto bill. It is debating the future structure of a market that still wants both institutional acceptance and open entry for new builders, two goals that do not always point in the same direction.
That tension is why the legislation has become so divisive. Supporters see it as the end of regulation by enforcement and the beginning of a more investable market.
Opponents see the risk that a bill sold as clarity could turn into a gatekeeping regime that protects incumbents, channels activity toward the largest regulated firms, and raises the cost of starting something new.
For now, the central issue is unresolved. If the bill passes and proves workable, it could reshape crypto’s US market structure and become a meaningful second-half story for institutional adoption.
If it stalls or emerges with rules critics see as too restrictive, the industry’s fight over clarity will not end. It will simply move from the courts and agencies to the next phase of political and competitive struggle over who gets to define crypto’s future in the United States.
