House Democrats held a hearing to express concerns about the CLARITY Act, a crucial piece of legislation proposing a regulatory framework for digital assets. Experts warned that the bill contains significant loopholes that could allow traditional financial firms to evade existing regulations. Amanda Fischer, a policy director at Better Markets, testified that the bill's gaps would allow traditional finance institutions to adopt blockchain technologies to circumvent regulations and reduce operational costs. Fisher highlighted that the legislation would classify most crypto tokens as 'digital commodities,' thus exempting them from SEC oversight and potentially sparking an increase in unregulated financial activities. Furthermore, concerns were raised regarding the two-tier system established by the bill, where most issuers may never engage with more stringent SEC registration processes, encouraging further exploitative actions in the crypto market.

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