Failing to pass the crypto market structure bill, known as the CLARITY Act, could leave the door open for a future less industry-friendly US government to crack down on crypto again, Peter Van Valkenburgh the executive director of advocacy group Coin Center says.
In an X post on Friday, Van Valkenburgh argued that rejecting developer protections in legislation like the CLARITY Act and the Blockchain Regulatory Certainty Act in favor of “short-term business interests” and the “continued goodwill of those in charge” could lead to a “grim” future for the industry.
“The point of passing CLARITY is not to trust this administration. It is to bind the next one,” he said, adding that “A world without CLARITY’s statutory protections for developers is a world governed by prosecutorial discretion, political fashion, and fear.”
The CLARITY Act stalled in the Senate after banks, crypto firms, and lawmakers failed to agree on key provisions — including whether to allow stablecoin yields. The bill covers a range of measures, including frameworks for registering crypto intermediaries, regulating digital assets and classifying tokens
During the previous US administration, former SEC Chair Gary Gensler drew heavy criticism from the crypto industry for allegedly crafting policy through enforcement actions and legal settlements with crypto firms rather than formal rulemaking.
Nothing set in stone without legislation
Van Valkenburgh also predicts that, without legislative clarification, a future administration’s Department of Justice could ramp up prosecutions of privacy-tool developers as unlicensed money transmitters, and that existing regulatory interpretive guidance could be revoked.
Related: Crypto investor sentiment will rise once CLARITY Act is passed: Bessent
Since Gensler resigned on Jan. 20, 2025, crypto proponents have seen a regulatory shift by the SEC, including the dismissal of several long-running enforcement actions against crypto firms and friendlier guidance on how the agency will treat crypto.
“If we lose this moment because we thought we’d have a bit more revenue and a bit more latitude under the short-term friendly discretion of the current administration, then we lose our way,” Van Valkenburgh said.
“We fail to stand up for the kind of transparency, neutrality, and openness that crypto stands for. And worse, we will have helped tie the noose ourselves, handing it to the future officials who will be only too happy to pull it tight.”
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Facts Only
Peter Van Valkenburgh, executive director of Coin Center, argues that failing to pass the CLARITY Act could lead to future regulatory crackdowns on crypto.
The CLARITY Act stalled in the Senate due to disagreements over key provisions, including stablecoin yields.
The bill aims to establish frameworks for registering crypto intermediaries, regulating digital assets, and classifying tokens.
Former SEC Chair Gary Gensler was criticized for shaping crypto policy through enforcement actions rather than formal rulemaking.
Gensler resigned on January 20, 2025.
The SEC has since dismissed several long-running enforcement actions against crypto firms and issued friendlier guidance.
Van Valkenburgh warns that without legislative protections, future administrations could prosecute privacy-tool developers as unlicensed money transmitters.
He argues that relying on short-term regulatory goodwill risks long-term instability for the crypto industry.
The CLARITY Act is intended to bind future administrations to clear regulatory standards.
Van Valkenburgh suggests that without such legislation, the industry could face governance by prosecutorial discretion and political shifts.
The Blockchain Regulatory Certainty Act is another piece of legislation mentioned as providing developer protections.
Van Valkenburgh predicts that existing regulatory guidance could be revoked without legislative clarification.
Executive Summary
The crypto industry faces regulatory uncertainty as the CLARITY Act, a proposed bill aimed at establishing clear frameworks for digital assets, stalls in the Senate. Key stakeholders, including banks, crypto firms, and lawmakers, failed to reach consensus on critical provisions, such as stablecoin yields. Peter Van Valkenburgh, executive director of Coin Center, warns that without such legislation, future administrations could exploit regulatory ambiguity to crack down on the industry. He argues that relying on temporary goodwill from current regulators risks long-term instability, as prosecutorial discretion and political shifts could lead to harsher enforcement. The previous administration, under SEC Chair Gary Gensler, was criticized for using enforcement actions rather than formal rulemaking to shape crypto policy. While recent regulatory shifts under the new SEC leadership have been more favorable, Van Valkenburgh emphasizes that legislative protections are essential to prevent future crackdowns. The CLARITY Act seeks to address registration frameworks for crypto intermediaries, digital asset regulation, and token classification, but its failure could leave developers vulnerable to prosecution under existing financial laws.
The debate highlights tensions between short-term industry interests and the need for long-term regulatory clarity. Without statutory protections, developers of privacy tools could face legal risks, and interpretive guidance could be revoked by future administrations. The industry's current regulatory relief may be fleeting, as political and legal landscapes can shift rapidly. Van Valkenburgh's warnings underscore the broader struggle for transparency and neutrality in crypto regulation, framing the issue as a choice between proactive legislative safeguards and reactive compliance with unpredictable enforcement.
Full Take
The strongest version of this narrative is that the crypto industry stands at a crossroads: it can either secure long-term regulatory clarity through legislation like the CLARITY Act or risk future crackdowns under less sympathetic administrations. Van Valkenburgh’s argument is compelling because it acknowledges the current regulatory relief while warning against complacency. The historical context of Gensler’s enforcement-heavy approach lends credibility to the concern that regulatory attitudes can shift dramatically with political changes. The narrative effectively frames the issue as a choice between proactive legislative action and reactive compliance, appealing to the industry’s self-interest in stability.
However, the argument also employs a subtle fear appeal (ARC-0012 Fear Appeal) by painting a "grim" future without legislative protections. While the warning is grounded in real regulatory risks, the framing leans toward urgency, which could be seen as an attempt to rally support by amplifying potential consequences. Additionally, the narrative presents a binary choice (ARC-0043 Motte-and-Bailey) between legislative clarity and regulatory chaos, which may oversimplify the complexities of policy negotiation. The assumption that legislation alone can "bind" future administrations is also debatable, as laws can be amended or reinterpreted.
The root cause of this narrative is the tension between innovation and regulation—a recurring theme in emerging industries. The unstated assumption is that the crypto industry’s survival depends on preemptive legal safeguards, which may not account for alternative paths, such as decentralized resistance to regulation or international jurisdictional arbitrage. Historically, this echoes patterns seen in other disruptive technologies, where industries initially resist regulation only to later seek it for legitimacy and stability.
The implications for human agency are significant. If the narrative is correct, developers and businesses in the crypto space could face arbitrary enforcement, stifling innovation and centralizing control. Conversely, if the industry overestimates the threat, it might overregulate itself, losing the decentralized ethos that defines crypto. The second-order consequences could include a brain drain of talent to more permissive jurisdictions or a fragmentation of the market along regulatory lines.
Bridge questions: What alternative mechanisms, beyond legislation, could protect crypto developers from regulatory overreach? How might the industry balance the need for clarity with the risk of over-regulation? What evidence would change your assessment of the likelihood of future crackdowns?
Counterstrike scan: A coordinated influence campaign pushing this narrative might exaggerate the risks of inaction to pressure lawmakers into passing favorable legislation. The actual content aligns with this pattern to some extent, as it emphasizes urgency and potential harm. However, the argument is grounded in real regulatory history and does not appear to be a manufactured crisis. The call for legislative action is a legitimate policy debate, not a clear sign of manipulation.