The failure to pass the CLARITY Act, a proposed framework for the cryptocurrency market, could set a dangerous precedent, paving the way for future U.S. administrations — particularly those less friendly to the industry — to impose tighter measures on cryptocurrencies. This is the warning from Peter Van Valkenburgh, Executive Director of Coin Center.
In a post on X, Van Valkenburgh emphasized that dismissing protections for developers in proposals like the CLARITY Act or the Blockchain Regulatory Certainty Act in exchange for short-term benefits and “comfort” from the current administration could lead to a long-term scenario full of instability for the entire industry.
According to him, the core goal of CLARITY is not to place trust in the current administration, but to establish legally binding constraints that are sustainable for future administrations. Without these statutory protections, the crypto ecosystem risks being dominated by discretionary prosecution, political volatility, and a risk-averse mindset — factors that erode the foundation of innovation.
The CLARITY Act is currently stalled in the Senate due to disagreements among stakeholders, revolving around key provisions such as allowing yield generation from stablecoins. The content of the bill includes creating a registration framework for crypto intermediaries, establishing regulatory standards for digital assets, and legal identification for tokens.
Under former SEC Chair Gary Gensler, the agency faced significant criticism for allegedly shaping policy through enforcement actions and legal settlements rather than building a transparent regulatory framework.
Increased Risks Without a Legal Framework
Van Valkenburgh warns that, in a scenario lacking legal clarity, the U.S. Department of Justice may intensify prosecutions of developers of security tools on charges of operating as unlicensed money transmitters. At the same time, existing interpretive guidance could be reversed, increasing the level of legal uncertainty.
After Gensler’s resignation on January 20, 2025, the SEC made adjustments toward a more open stance, including retracting some prolonged enforcement actions and providing more industry-friendly guidance.
However, Van Valkenburgh warns that if the industry trades away the opportunity to establish a long-term legal foundation merely to capitalize on short-term advantages, the consequences could be severe. According to him, this means abandoning core values such as transparency, neutrality, and openness — while inadvertently empowering future policymakers to tighten control over the entire ecosystem.
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