House Democrats raised concerns over the CLARITY Act, a proposed cryptocurrency market structure bill, during a hearing. The bill aims to create a legal framework for digital assets in the U.S., potentially exempting a significant number of crypto assets from SEC oversight. Witnesses, including Amanda Fischer from Better Markets, warned that the legislation's loopholes could encourage traditional financial firms to bypass regulations by using blockchain technology for routine financial operations, such as capital raising. They expressed that carving out crypto from established securities laws might lead to widespread regulatory evasion. The discussions emphasized that the bill's implications extend beyond the crypto sector, potentially affecting the entire securities market. There are fears that token issuers will choose the easier regulatory pathway instead of adhering to more stringent SEC requirements, thus undermining consumer protections within the financial system.

Source 🔗