House Democrats convened a hearing to discuss concerns regarding the CLARITY Act, which proposes a regulatory framework for digital assets, potentially allowing traditional finance firms to evade regulations inherent in U.S. securities laws. Witnesses warned that without careful oversight, the Act could create loopholes, enabling established institutions to sidestep regulatory requirements by utilizing blockchain technology. Amanda Fischer, a policy director at Better Markets, expressed that the regulatory gaps could incentivize traditional firms to exploit blockchain for capital raising, resulting in lower operational costs compared to traditional securities operations. Additionally, the Act's two-tier system for categorizing crypto assets may lead issuers to avoid stricter SEC engagement in favor of easier regulatory routes. Democratic leaders emphasized the need for stricter regulations while Republicans refuted claims regarding political motivations behind the hearing.

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