Author: Matt Hougan, Chief Investment Officer of Bitwise; Translated by: AIMan@Jinse Finance
I am very optimistic about the prospects of cryptocurrencies this year. The current environment - with increasing institutional participation, improving regulatory landscape, and significant blockchain technology advancements - is very strong.
My basic prediction is that the trading prices of most crypto assets will reach historical highs this year, with Bitcoin breaking through $200,000.
But...
People often ask me, what factors could hinder cryptocurrency development. My answer is simple: people. More specifically, politicians.
After the November election, cryptocurrency prices rose, partly because people believed Washington would have a positive attitude towards cryptocurrencies. So far, this has been the case. In the first hundred days of the Trump administration, we have seen:
The US establishing a strategic BTC reserve, currently holding nearly 200,000 BTC
The White House listing digital assets as a "national priority"
The US SEC withdrawing almost all boring lawsuits related to cryptocurrencies
The US SEC rescinding SAB 121 (a set of strict cryptocurrency accounting rules) and allowing more banks and broker-dealers to operate in the field
The end of "Operation Chokepoint 2.0", which cut off cryptocurrency companies from traditional banking services
Crypto advocate Paul Atkins appointed as the new chairman of the US SEC
Famous venture capitalist David Sacks appointed as the "Crypto and AI Czar" by the White House
This is an incredible list. However...
We Need Legislation to Consolidate Our Progress
The common thread among these measures is that they all come from the White House. This means they can easily be overturned by future administrations.
To advance cryptocurrencies, we need Congress to pass legislation that incorporates cryptocurrency progress into the legal framework. Congress passing at least one cryptocurrency bill would demonstrate that Democrats and Republicans can agree on cryptocurrency issues and make it harder for future administrations to stop cryptocurrency progress.
Entering this year, I thought this was a sure bet. Specifically, I expected Congress to quickly pass stablecoin legislation, paving a solid regulatory pathway for the world's largest financial institutions to enter the stablecoin market.
After all, stablecoins offer something for everyone:
For cryptocurrencies, they broaden market access.
For Wall Street, they create a new profit center.
For Washington, they are massive buyers of US Treasury bonds and a tool to expand the dollar's global dominance.
Win, win, win.
Until recently, we were smoothly moving towards victory.
In mid-March, the Senate Banking Committee passed a leading stablecoin bill called the GENIUS Act with 18 votes in favor and 6 against. In this vote, five Democratic committee members crossed party lines to support the bill. Senate Minority Leader Chuck Schumer (Democratic representative from New York) even expressed support.
But last weekend, nine Democrats - including four of the five Democrats who voted in support in the banking committee, and Schumer himself - withdrew their support for the bill. They stated that the bill was insufficient in anti-money laundering and "know your customer" (AML/KYC) protections.
This attitude shift reflects changes in the Washington political environment. The revised bill is actually more stringent in anti-money laundering/know your customer (AML/KYC) and other aspects compared to the version passed by the banking committee, suggesting that the Democratic Party's attitude change is more related to Trump's declining approval ratings and increasing discussions about his cryptocurrency-related conflicts of interest.
Politics is messy. But often, it's messier than it should be.
Equally ineffective is the crypto industry's lobbying to combine stablecoin legislation with broader market structure legislation to create a massive and beautiful crypto bill.
This is the opposite of a good thing. Market structure legislation is crucial for the long-term future of cryptocurrencies, but mixing various factors will make passing any bill more difficult.
What Happens Next
I believe the stablecoin bill will ultimately pass. The benefits of stablecoins for the US, the dollar, merchants, entrepreneurs, and other parties are so obvious that trivial political maneuvering won't hinder its progress.
At least I hope so.
The next few days and weeks will be challenging. If legislation fails, this summer could be challenging for cryptocurrencies. But if Washington can work together, I believe the bull market will be unstoppable.
In any case, keep an eye on Washington.
