Gnosis Founder Warns: Pushing CLARITY Act Will Hand Over Crypto Autonomy to Centralized Wall Street

The core breakthrough of blockchain is enabling users to become owners of the network, not tenants — warned Gnosis co-founder Friederike Ernst. She cautioned that if the CLARITY Act mandates all transactions go through centralized institutions, this fundamental advantage will be lost.
(Background: In-depth analysis of the CLARITY Act: A new-old financial century game under the guise of regulation)
(Additional context: The CLARITY Act faces obstacles, benefiting the crypto industry and Bitcoin, prompting parties to return to the negotiation table)

Gnosis blockchain protocol co-founder Friederike Ernst recently issued a stern critique, pointing out that the current provisions of the U.S. Digital Asset Market Structure Clarity Act (CLARITY Act) effectively assume all crypto activities must flow through centralized intermediaries. This move risks handing over the crypto industry’s foundational infrastructure to a few entrenched financial giants.

“The true breakthrough of blockchain isn’t just a new financial infrastructure, but enabling users to become owners of the networks they rely on,” Ernst said. “If all activities are forced to go through intermediaries, users will regress from stakeholders to customers merely renting financial technology.”

Ernst emphasized that regulatory clarity is necessary, but the problem is: clarity should not come at the expense of ownership models. She worries that if the CLARITY Act fails to effectively protect open, permissionless blockchains and decentralized finance (DeFi) protocols, it will simply replicate the centralized failure points of traditional finance within the crypto space.

Pros and Cons of the Bill, Coinbase Takes the Lead in Opposing

Ernst does not entirely oppose the bill. She acknowledges that the CLARITY Act clarifies the SEC and CFTC’s jurisdiction over crypto markets and explicitly protects peer-to-peer transactions and self-custody rights. However, these advantages are still insufficient to address the fundamental flaws in decentralization protections.

Crypto exchange Coinbase has already taken action. In January, Coinbase announced it would withdraw support for the CLARITY Act, citing provisions that weaken DeFi, ban stablecoin yield sharing, and hinder tokenized real-world assets (RWA) growth. CEO Brian Armstrong stated on X after reviewing the draft: “Rather than passing a bad law, it’s better to do nothing at all.”

Stablecoin Yield Controversy Stalls Legislation

Currently, the CLARITY Act is stalled in Congress, with the core issue being a fundamental disagreement between the crypto industry and traditional finance over stablecoin yields — specifically, whether stablecoin issuers can share interest with holders. What seems like a technical detail has evolved into a battle over the future direction between traditional financial powers and crypto-native forces.

U.S. Senator Bernie Moreno remains optimistic, believing the bill can complete legislative procedures before April and be sent to President Trump for signing. However, Galaxy Research Director Alex Thorn offers a more cautious assessment. On X, he noted that if the bill cannot clear hurdles by April, the chances of it becoming law by 2026 are “extremely low,” adding: “Stablecoin yields are probably not the final obstacle, but just the mountain currently blocking the bill.” Issues like DeFi provisions, developer protections, and regulatory authority could trigger new conflicts down the line.

Market Watch: The legislative process of the CLARITY Act is essentially a political struggle over “control of the crypto network.” Ernst’s warning highlights a core paradox: if regulatory clarity comes at the cost of making centralized institutions indispensable gatekeepers, then what this bill protects may be the business interests of financial institutions rather than user sovereignty.