- Bitwise CIO warns crypto growth is at risk without Congressional legislation, despite recent executive actions.
- GENIUS Act stalls as Democrats reverse votes over AML/KYC concerns, jeopardizing bipartisan crypto progress.
- Hougan sees Bitcoin soaring past $200K in 2025, but only if U.S. lawmakers secure stable crypto policies.
Matt Hougan, Chief Investment Officer of Bitwise Asset Management, warned that if Congress fails to pass pending crypto legislation, the U.S. crypto market could face significant difficulties this summer. However, Hougan warned clients in a note that even after the legislative progress from the executive branch, in the absence of concrete legislation, the industry’s long-term growth could be at stake.
Hougan suggested the GENIUS Act could have been a key opportunity for bipartisan progress and looked towards stablecoin reform. At first, it evoked bipartisan support, but then some Democratic senators withdrew their support. Hougan noted this political reversal to mean there’s more of a risk that crypto policies that are friendly to the current administration won’t have a lasting impact without a bill to back them up.
Stablecoin Legislation Stalls in Senate
The Senate Banking Committee approved the GENIUS Act, which aims to offer a clear regulatory framework for stablecoins, with an 18 to 6 vote. The bill also requires that stablecoins be 100% backed by U.S. dollars or short-term treasury assets. In addition, large issuers should have monthly reserve disclosures, annual audits and insolvency procedures.
Nine Democratic senators, including four who had previously voted for the bill, flipped their vote before the Senate floor vote. They expressed concerns about the bill’s anti-money laundering (AML) and know-your-customer (KYC) provisions. The recently updated bill added stronger AML/KYC measures, but some lawmakers still maintain they are not enough.
The sudden change has injected uncertainty into the bill’s ability to muster 60 votes. Bipartisan cooperation is necessary with 53 Republican seats in the Senate. Ratings criticizing Trump’s association with crypto projects appear to have moved support.
Executive Actions Highlight Progress and Vulnerability
Over the past 100 days, the Trump administration has enacted several measures viewed as positive by the crypto industry. Additionally, the SEC has withdrawn restrictive accounting guidance (SAB 121), easing banking access for crypto firms, and appointed crypto advocate Paul Atkins as SEC chair.
Despite these developments, Hougan stressed that all such actions originated from the executive branch and are subject to reversal by future administrations. He argued that only Congressional legislation can provide the legal foundation required for the crypto sector to maintain and expand its progress over the long term.
Market Outlook Hinges on Policy Certainty
While political uncertainty remains the most significant risk factor, Hougan sees a positive crypto market trajectory in 2025. According to him, major cryptocurrencies like Bitcoin are set to surge to new all-time highs this year, and Bitcoin itself can go much higher than $200,000. However, he noted that this optimistic outlook could be reversed if Congress fails.
The crypto market dynamics have changed due to the rapid involvement of institutional investors and macroeconomic hedge funds. According to Hougan, this is a maturation for Bitcoin, going from a cryptocurrency to something more stable as a hedge asset. The amendment allows for broad participation to maintain sustained growth.
Efforts to carve out a stablecoin for regulation have been tied to, and even complicated by, efforts to more generally regulate market structure. ‘If you’re trying to fuse too many things, you don’t move on legislation,’ Hougan cautioned. The outcome of these debates in Congress may determine the near-term performance of the crypto sector.
