Written by: Matt Hougan, Chief Investment Officer of Bitwise
Translated by: Luffy, Foresight News
I am increasingly worried that Congress might mess things up when we are just a step away from success.
I am very optimistic about the prospects of cryptocurrencies this year, with the current situation being extremely favorable: increasing institutional participation, improved regulatory environment, and significant progress in blockchain technology.
I believe that the trading prices of most cryptocurrencies will reach new historical highs this year, with Bitcoin's price rising above $200,000.
But... people often ask me what could derail the development of cryptocurrencies from this script? My answer is simple: people; more precisely, politicians.
After the election in November last year, cryptocurrency prices rose, partly because people believed Washington would have a positive attitude towards cryptocurrencies. So far, this has indeed been the case. In the first 100 days of the Trump administration, we have seen the following:
The United States established a strategic Bitcoin reserve, holding nearly 200,000 bitcoins
The White House listed digital assets as a "national priority"
The SEC almost withdrew all unreasonable lawsuits related to cryptocurrencies
The SEC revoked SAB 121 (a set of stringent accounting rules for cryptocurrencies) and allowed more banks and broker-dealers to operate in this field
Operation Choke Point 2.0 ended, which had previously cut off cryptocurrency companies from traditional banking services
Cryptocurrency advocate Paul Atkins became the new chairman of the SEC
Renowned venture capitalist David Sacks was appointed as the White House "Crypto and AI Czar"
This is an amazing list. However...
We Need Legislation to Consolidate Achievements
The common point of these items is that they all originate from the White House, which means the next administration can easily overturn these measures.
To push the cryptocurrency industry forward, we need Congress to pass legislation that legally establishes the progress made in cryptocurrencies. Congress should pass at least one cryptocurrency bill, demonstrating that Democrats and Republicans can reach a consensus on cryptocurrencies and make it harder for future governments to overturn these achievements.
At the beginning of this year, I thought this was almost certain. Specifically, I expected Congress to quickly pass legislation related to stablecoins, creating a solid regulatory path for the world's largest financial institutions to enter the stablecoin market.
After all, stablecoins benefit everyone:
For the cryptocurrency industry, they broaden market access channels
For Wall Street, they create a new source of profit
For Washington, they are major buyers of US Treasury bonds and an effective tool to expand the dominance of the US dollar globally
This is a win-win-win situation.
Until recently, we were steadily moving towards this victory.
In mid-March, the Senate Banking Committee passed the main stablecoin bill, the GENIUS Act, with an 18-6 vote. In that vote, five Democratic committee members supported the bill across party lines. Senate Minority Leader Chuck Schumer even expressed support.
But last weekend, nine Democrats (including four of the five Democrats who voted to bring the bill out of committee, and Schumer himself) withdrew their support. They stated that the bill did not do enough in terms of anti-money laundering and KYC protections.
This change in attitude reflects the constantly changing political environment in Washington. In fact, the revised bill is stronger in anti-money laundering and KYC aspects compared to the version passed in the banking committee, indicating that the Democrats' attitude change is more due to Trump's declining support rate and increased discussions about his potential conflicts of interest with cryptocurrencies, rather than any substantive concerns.
Politics is complex and messy. But often, it is more chaotic than it needs to be.
Additionally, various factions in the cryptocurrency industry are lobbying to combine stablecoin legislation with broader market structure legislation, aiming to create a comprehensive and perfect cryptocurrency bill.
This approach seeks perfection and hinders the implementation of viable solutions. Market structure legislation is crucial for the long-term future of cryptocurrencies, but mixing various matters makes passing any bill more difficult.
What Will Happen Next
I believe the stablecoin bill will eventually pass. The benefits of stablecoins are too obvious for the United States, the dollar, merchants, entrepreneurs, and all parties, making it unlikely to be hindered by trivial political disputes.
The next few days and weeks will be challenging. If legislation fails, this summer could be challenging for the cryptocurrency industry. But if Washington can work together, I believe the bull market will be unstoppable.
In any case, please closely monitor the developments in Washington.
