Gate News message, April 19 — Galaxy Digital’s (NASDAQ: GLXY) research head Alex Thorn has cautioned that the Digital Asset Market CLARITY Act, despite industry hopes for regulatory clarity, contains provisions that could represent the largest expansion of financial surveillance since the USA PATRIOT Act. Thorn issued the warning in a January 2026 client note as the U.S. Senate resumed debates on the bill following its recess.
According to Thorn’s analysis, the Office of Foreign Assets Control (OFAC) has historically sanctioned 518 Bitcoin addresses that have cumulatively received 249,814 BTC, sent 239,708 BTC, and currently hold a net balance of approximately 9,306 BTC, worth roughly $707 million. The CLARITY Act would expand OFAC’s powers significantly, granting the Treasury Department new tools to intercept illicit assets. Thorn warned in March that if the bill does not pass committee by the end of April 2026, passage this year becomes “extremely low.” Negotiators are reportedly close to a deal on stablecoin yields, but other hurdles remain.
Cardano founder Charles Hoskinson has also raised concerns, arguing the bill’s broad provisions could be exploited by future administrations regardless of political party. The automatic classification of new digital tokens as securities with virtually no reclassification pathway is seen as particularly problematic, stifling competition. Additionally, the introduction of “Distributed Ledger Application Layers” could create compliance obligations for software applications that might force DeFi interfaces to monitor users.
Meanwhile, Wall Street institutions including JPMorgan Chase & Co. (JPM) and Citadel LLC are actively lobbying to ensure tokenized securities do not receive special treatment. Thorn argues that decentralized automated market makers (AMMs) should not be classified as exchanges because they are “autonomous code” rather than organizations operating marketplaces. He contends that liquidity providers on AMMs are traders using their own capital, not dealers serving customers. The tentative compromise under negotiation would ban passive “idle yield” on stablecoins to address bank concerns about deposit drains, while allowing activity-based rewards.
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