White House stablecoin deadline slips as Hoskinson warns CLARITY Act could push US crypto founders offshore

Washington's Crypto Rulebook Debate Ignites Industry Division

The push for a federal cryptocurrency rulebook in Washington has reignited a long-standing industry debate about the true impact of regulatory clarity and its beneficiaries. At the heart of this discussion is H.R. 3633, the Digital Asset Market Clarity Act of 2025, which proponents hail as a much-needed alternative to years of regulation by enforcement.

This legislation aims to define digital asset boundaries, assign oversight responsibilities, and establish a federal legal framework for tokens and intermediaries. However, the bill has generated sharply contrasting interpretations regarding its future implications.

A Promise of Clarity for Established Players

The CLARITY Act is designed to replace the current system of lawsuits, enforcement actions, and contested interpretations with a formal rulebook. This prospect is appealing to large, regulated entities, as a clear statute can mitigate legal risks, provide compliance frameworks for banks and brokerages, and facilitate the development of products for custody, trading, and tokenization.

JPMorgan analysts believe that a market-structure law passed by midyear could significantly boost digital assets in the latter half of 2026 by reducing legal uncertainty and easing institutional expansion. They argue that clearer legal lines could end regulation by enforcement, promote tokenization, and foster greater institutional participation. If enacted by midyear, banks and brokerages would have time to integrate the law into their product planning and compliance processes before year-end, positioning the legislation as a catalyst for market activity.

In a market with weakened risk appetite and Bitcoin trading below its previous highs, a rulebook that expands the investable universe for institutions could have a more pronounced effect.

Concerns Over Innovation and New Entrants

Critics, such as Cardano founder Charles Hoskinson, express concerns not with the need for legislation itself, but with the proposed structure of the CLARITY Act. Hoskinson argues that the bill could default many new crypto projects to securities status, requiring them to later prove to regulators that they have sufficiently decentralized. He contends that this approach would formalize a system where the SEC has significant discretion, potentially stifling innovation.

“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.”

Hoskinson warns that the bill could replace ambiguity with a rigid structure favoring established networks and well-capitalized firms. He suggests that older projects might navigate the transition better, but future builders could be deterred from launching new projects in the U.S. if they anticipate a lengthy and uncertain process to move out of securities treatment. This could lead founders to opt for offshore launches, undermining the U.S.'s competitiveness in blockchain development.

“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.”

Stablecoin Rewards Emerge as a Political Sticking Point

A significant obstacle in Washington is the debate over stablecoins, specifically whether issuers or affiliated platforms should offer rewards resembling yield. This issue has become a major point of contention, with failed attempts to bridge the gap between banks and crypto firms.

Crypto firms seek to offer regulated reward programs around stablecoins like USDC, while banks view these products as a direct threat to their deposit base. The concern is that if stablecoin rewards offer significantly higher returns than traditional savings accounts, it could lead to deposit migration, impacting bank funding models and potentially affecting monetary policy transmission.

While there's some agreement that stablecoin balances shouldn't directly pay interest like bank accounts, crypto firms are exploring alternative structures like memberships or staking. Banks perceive these as attempts to create deposit competition outside the traditional regulatory framework, complicating legislative efforts.

Potential Market Impacts of the CLARITY Act

The passage of the CLARITY Act could lead to several market scenarios. In a constructive outcome, workable implementation following midyear passage would align with JPMorgan's view, reducing legal uncertainty and enabling regulated U.S. venues to expand offerings, benefiting exchanges, brokers, and custodians.

A second scenario involves passage with strict limits on stablecoin rewards, potentially redirecting demand for yield to products like tokenized deposits or money market structures. Some decentralized finance segments might see temporary inflows, but this could also attract increased regulatory scrutiny.

A third scenario, a delay in passage, would maintain uncertainty. This outcome would support critics' arguments that the U.S. favors established assets and may cause newer projects to develop elsewhere. The market effect would likely be gradual, influencing where founders build and venture capital is deployed.

The Underlying Disagreement on Clarity

The CLARITY Act has highlighted a fundamental disagreement about what the industry seeks from regulatory clarity. For institutions, clarity means reduced legal ambiguity and a path for expansion. For critics like Hoskinson, the concern is whether the proposed framework could subject future networks to a potentially inconsistent regulatory process.

The debate extends beyond a crypto bill to the future structure of a market balancing institutional acceptance with open entry for new builders. Supporters view the bill as an end to regulation by enforcement and the start of a more investable market, while opponents fear it could become a gatekeeping regime protecting incumbents and increasing costs for new ventures.

If the bill passes and proves workable, it could reshape the U.S. crypto market structure and drive institutional adoption. If it stalls or includes restrictive rules, the industry's fight for clarity will continue, shifting to political and competitive arenas to define crypto's future in the United States.