U.S. Treasury Secretary Scott Bessent delivered sharp criticism of parts of the crypto industry during a Senate hearing, accusing some market participants of actively resisting regulation and slowing progress on long-awaited digital asset legislation.

Testifying before the Senate Banking Committee, Bessent said there appears to be a group within the crypto industry that prefers no regulation at all, even when constructive rules are on the table.

“There seems to be a nihilist group in the industry who prefers no regulation over this very good regulation,” Bessent said, referring to negotiations around the Digital Asset Market Clarity Act.

Rare alignment with lawmakers

Bessent’s comments drew vocal support from Senator Mark Warner, one of the bill’s key Democratic negotiators. Warner echoed the frustration, saying lawmakers are working intensively to move the legislation forward despite continued resistance from industry voices.

“I feel like I’m in crypto hell,” Warner remarked during the hearing, noting that unresolved concerns around decentralized finance and national security remain major sticking points.

Industry pushback complicates talks

The Clarity Act has faced sustained criticism from parts of the crypto sector, particularly over provisions related to decentralized finance, stablecoin yield rewards, and how tokens are classified under securities law.

Among the most prominent critics has been Brian Armstrong, who has raised concerns about how the bill could affect innovation and DeFi activity. Armstrong’s decision to withdraw support for an earlier version of the legislation last month was seen as a significant setback in the bill’s momentum.

Lawmakers have struggled to balance competing demands from crypto firms, traditional financial institutions and regulators, especially on the issue of stablecoin yields and oversight authority.

National security and DeFi concerns

Warner emphasized that while technical issues such as rewards and yields can be resolved, national security risks tied to decentralized finance cannot be ignored.

“These national security issues around DeFi are real,” Warner said, warning against regulatory gaps that could weaken existing enforcement powers or create large exemptions for certain crypto activities.

“Move to El Salvador”

Bessent stopped short of naming specific companies but made his position clear on the need for federal oversight. He argued that the crypto industry cannot fully advance in the U.S. without clear market structure rules.

“It’s impossible to proceed without it,” Bessent said of the Clarity Act. “We have to get this across the finish line. And any market participants who don’t want it should move to El Salvador.”

The comment underscored the administration’s view that operating in U.S. markets requires accepting regulatory oversight, even in an industry built on decentralization.

Building on stablecoin regulation

Bessent pointed to the earlier GENIUS Act as an example of balanced crypto legislation, saying it successfully combined innovation with safeguards. He suggested a similar approach could ultimately bring the Clarity Act across the finish line later this year.

“There are people who want to live in the U.S. but not have rules for this important industry,” Bessent said. “We need safe, sound and smart practices, along with government oversight, while still allowing for the freedom that defines crypto.”

A defining moment for U.S. crypto policy

The exchange highlighted growing tensions between policymakers pushing for regulatory clarity and industry factions wary of increased oversight. As negotiations continue, the fate of the Digital Asset Market Clarity Act is increasingly seen as a turning point for whether the U.S. can establish a coherent framework for crypto markets or risk losing innovation to jurisdictions with looser rules.