- Charles Hoskinson argues that under the revised CLARITY Act, tokens like XRP would qualify as securities, igniting his feud with the XRP community.
- He called Ripple CEO Brad Garlinghouse out again, cautioning that having no laws is better than having a bad law.
Cardano founder Charles Hoskinson has revived the heated debate over the proposed Digital Asset Market Clarity Act of 2025, this time arguing that XRP would be classified as a security under the bill.
Hoskinson cited a response from Google’s Gemini chatbot, which says that, based on the bill as is, “XRP would have likely been classified as an investment contract asset (a security) at the time of its initial launch, rather than a digital commodity.”
The CLARITY Act classifies every other token as a security by default, but it can transition into a commodity as network usage grows. This means that every new token will be under the oversight of the SEC and cannot be listed on exchanges as quickly or easily as in the past. It will then be up to the team behind the token to prove that it’s not a security and to transition to the CFTC’s jurisdiction.
JUST IN: #Cardano $ADA Founder Charles Hoskinson says “the SEC requires that any issuer filing for digital commodity graduation must demonstrate that no single beneficial owner controls over 20% of network stake. Right now, it would mean $XRP is a security under that standard.” pic.twitter.com/4MXAzvXzfy
— Angry Crypto Show (@angrycryptoshow) March 3, 2026
To shake off the ‘security’ classification, a project must prove it has a ‘mature blockchain’ that’s sufficiently decentralized and that the token’s value is not dependent on the efforts of the founding team.
Ultimately, the SEC gets to decide whether any token is a security, and therein lies the problem, according to Hoskinson. The regulator has a history of frustrating companies seeking guidance, delaying its decisions for months.
“Welcome to what the FDA does, and what New York State did with the BitLicense,” Hoskinson notes, adding:
So, XRP would have to prove to the SEC that it’s not a security, and they act as judge, jury and executioner. They [XRP] start as one by default under this bill; no judge gets to decide otherwise; the bill makes them [a security].
Hoskinson: Bad Law is Worse Than No Law
Hoskinson was once a supporter of the CLARITY Act and was involved in the Trump administration’s crypto regulatory efforts, as we reported. However, since the bill was amended, he has been one of its most vocal critics and has even called out those in support, like Ripple CEO Brad Garlinghouse.
One of his main criticisms of the bill is the power it gives to the SEC and other regulators. In his latest analysis, he notes that one of the pitfalls for crypto companies will be the value attribution test. Under this, the SEC can demand that a crypto project prove that at least 50% of the token’s appreciation over the past 24 months was driven by on-chain utility demand rather than secondary market speculation.
The SEC can define the metrics any way it wants, as they are not set out by the bill. Currently, the US government is majorly pro-crypto, but there’s no guarantee that the next president will be as friendly to the industry. If the next SEC leadership is as anti-crypto as Gary Gensler’s was, the metrics could be set up to keep the vast majority of crypto in the securities bracket.
“This is why I’m opposed to the bill. Through rule-making, it can become horrific and weaponized, and it doesn’t cover the core of what’s going on in the industry right now, ” Hoskinson says.
