Why CLARITY Could Repeat Reg A+'s Biggest Mistake

In a joint letter to the Senate Banking Committee, CoinList, joined by MetaDAO, Dromos Labs, Metaplex, and Polymer, addressed some of the shortcomings of CLARITY.

CLARITY’S HIDDEN ECONOMIC HURDLE

The current draft of the CLARITY Act contains a "hidden" economic hurdle: the requirement for financial statements to be audited or reviewed by an independent public accountant. While well-intentioned, this threatens to repeat the failures of Reg A+.

Reg A/A+ was designed to allow companies to fundraise from both institutions and retail investors. Released as part of the JOBS Act in 2012, it has been described as a “mini IPO” - less burdensome on companies, but equally accessible to all investors. The spirit of Reg A was to build more inclusive capital formation in private markets.

In an era where private companies are staying private past $1 Trillion in market cap, these exemptions should have been a godsend. Instead, the new rules were largely ignored. Only a handful of companies have used Reg A/A+ on their path to a future IPO and full registration.

This same framework rendered Reg A+ a failure for emerging companies and is being applied to fundraising for crypto protocols in the Clarity Act.

The requirement for financial statements reviewed or audited by an independent public accountant is a mandate for a service that largely does not exist. Most mid-tier and boutique accounting firms lack the expertise to audit complex on-chain protocols, and the "Big Four" remain prohibitively expensive for early-stage startups.

Even if the service were accessible, the time required to secure this audit is far too long for any earlier stage startup. Waiting 6-12 months for a full audit and then another 3-6 months for certification is often the difference between life and death of any start-up, no matter how successful.

The end result is that most companies will do exactly what they do today. They will flee offshore or exclude retail participation for capital formation.

The Solution: High-Stakes Executive Certification

Following the precedent set by the GENIUS Act of 2025, the joint letter proposes replacing the audit mandate with a high-stakes Executive Certification signed by the CEO or CFO. This shifts the burden of proof from an external (and often confused) auditor to the people who know the project best: the founders and subjects them to criminal liability for fraud.

This proposal moves the industry forward by maturing the ecosystem and forcing founders to be adults who must stand behind their data with the same personal accountability expected in traditional finance.

Why It Matters: On-Chain Ledgers ARE the Financial Statement

The fundamental insight of the April 24th Joint Letter (signed by CoinList, MetaDAO, Dromos Labs, Metaplex, and Polymer) is that blockchain technology renders traditional audits largely redundant:

1. Truth is Immutable: On-chain transactions are cryptographically secured and publicly verifiable in real-time.
2. Zero Information Asymmetry: Any regulator or investor with a block explorer has the same information as a certified accountant.
3. Reducing Redundancy: Requiring a human to re-verify what the protocol already proves is not "investor protection"—it is an unnecessary tax on innovation.

Protecting the Smallest Builders

By prioritizing Executive Certification over legacy accounting procedures, we ensure that the U.S. remains the premier destination for capital formation.

Want to read what we wrote? Check out the letter here.