Washington, the "Schrodinger's Cat" of Crypto Assets?

We need legislation to solidify the achievements currently made in Crypto Assets.

Written by: Matt Hougan, Chief Investment Officer of Bitwise

Compiled by: Luffy, Foresight News

I am increasingly worried that Congress will mess things up just when we are a step away from success.

I am very optimistic about the prospects of Crypto Assets this year. The current situation is extremely favorable: institutional participation is continuously rising, the regulatory environment is improving, and blockchain technology has made significant progress.

I believe that this year, the trading prices of most Crypto Assets will reach historical highs, with Bitcoin prices rising above $200,000.

But... people often ask me what could make the Crypto Assets develop outside this script? My answer is simple: people; more specifically, politicians.

After the November elections last year, the prices of Crypto Assets rose, partly because people believed that Washington would take a positive stance on Crypto Assets. So far, that has indeed been the case. In the 100 days since the Trump administration took office, we have seen the following:

• The United States has established a strategic Bitcoin reserve, holding nearly 200,000 coins.
• The White House has listed digital assets as a "national priority"
• The U.S. Securities and Exchange Commission (SEC) has nearly dismissed all unreasonable lawsuits related to Crypto Assets.
• The U.S. Securities and Exchange Commission has rescinded SAB 121 (a set of stringent accounting rules for Crypto Assets) and allowed more banks and brokerage firms to operate in this field.
• Operation Choke Point 2.0 has ended, a campaign that had severed the connection between Crypto Assets companies and traditional banking services.
• Crypto Assets advocate Paul Atkins takes office as the new chairman of the U.S. Securities and Exchange Commission
• Well-known venture capitalist David Sacks has been appointed as the White House's "Crypto Assets and Artificial Intelligence Czar"

This is an amazing list. However…

We need legislation to consolidate achievements

The common point of the above matters is that they all originate from the White House, which means that the next government can easily overturn these measures.

To promote the development of the Crypto Assets industry, we need Congress to pass legislation that formalizes the progress made in Crypto Assets into law. Congress should pass at least one Crypto Assets bill to indicate that the Democrats and Republicans can reach a consensus on the Crypto Assets issue, making it more difficult for future administrations to overturn these achievements.

At the beginning of this year, I thought this was a sure thing. 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 are beneficial for all parties:

• For the Crypto Assets industry, they have widened the market access channels.
• For Wall Street, they have created a new source of profit.
• For Washington, they are major buyers of U.S. Treasury bonds and an effective tool for expanding the dominance of the U.S. dollar globally.

This is a win-win-win situation.

Until recently, we have been steadily moving towards this victory.

In mid-March, the Senate Banking Committee passed the major stablecoin legislation, the "GENIUS Act," by a vote of 18 to 6. During that vote, five Democratic committee members supported the bill in a bipartisan manner. Senate Minority Leader Chuck Schumer even expressed his support.

However, last weekend, nine Democrats (including four of the five Democrats who voted to advance the bill from committee, as well as Schumer himself) withdrew their support. They stated that the bill does not do enough in terms of anti-money laundering and KYC protections.

This shift in attitude reflects the changing political environment in Washington. In fact, the revised version of the bill is stronger in areas such as anti-money laundering and KYC than the version passed by the Banking Committee, indicating that the Democrats' change in attitude is more a result of Trump's declining approval ratings and increasing discussions about his conflicts of interest related to Crypto Assets, rather than any substantive concerns.

Politics is complex and chaotic. But often, it is more chaotic than the situation actually requires.

Equally disadvantageous is that various forces in the Crypto Assets industry are lobbying to combine stablecoin legislation with broader market structure legislation, aiming to create a comprehensive and complete Crypto Assets bill.

This approach pursues perfection at the expense of implementing feasible solutions. Market structure legislation is extremely important for the long-term future of Crypto Assets, but mixing various issues together makes the passage of any bill much more difficult.

What will happen next

I believe the stablecoin legislation will ultimately pass. The benefits of stablecoins are simply too obvious for the United States, the dollar, merchants, entrepreneurs, and other parties; it is unlikely that their development process will be hindered by some trivial political disputes.

The next few days and weeks will be full of challenges. If legislation fails, this summer could be challenging for the Crypto Assets industry. But if Washington can come together, I believe the bull market will be unstoppable.

In any case, please keep a close eye on the developments in Washington.