House Democrats have raised concerns regarding the CLARITY Act, a proposed crypto market structure bill that seeks to establish a regulatory framework for digital assets. During a hearing, Democrats highlighted loopholes in the legislation that could allow traditional financial institutions to evade regulations by adopting blockchain technology more broadly. Witnesses, including Amanda Fischer from Better Markets, warned that the bill's exemptions from the SEC's oversight could incentivize firms to bypass existing securities laws. Critics argue that many token issuers would avoid the rigorous registration process and exploit the regulatory gaps to categorize their assets as 'digital commodities.' The hearing provided a platform for Democrats to address the bill's implications, especially its potential to undermine investor protections and traditional financial regulations.

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