Crypto is Going Mainstream and ‘You Can’t Put the Genie Back in the Bottle,’ Bitwise Says
The United States is poised to enact landmark cryptocurrency legislation, potentially revolutionizing the industry and mitigating significant risks, according to a recent Bitwise report. This legislation, if passed, would unlock substantial growth by providing regulatory clarity.
Bitwise argues that this clarity would empower major financial institutions like JPMorgan, BNY Mellon, and Nasdaq to fully integrate cryptocurrency into their operations. This integration could unlock billions in new investments and facilitate the migration of trillions of dollars in traditional assets onto blockchain platforms. The necessary infrastructure is already in place; only Washington’s approval is needed.
Currently, the House of Representatives is considering the CLARITY Act, addressing crypto market structure, and the GENIUS Act, regulating stablecoins. While the Senate overwhelmingly passed the GENIUS Act with bipartisan support, the House’s consideration of the market structure bill faces potential hurdles. A leading Democrat on the Senate Agriculture committee has voiced concerns requiring significant changes.
Bitwise CIO Matt Hougan emphasizes the irreversible nature of this legislative shift, stating that passing these bills would make it impossible to “put the genie back in the bottle.” He highlights the often-overlooked impact on risk reduction. The crypto market has suffered damaging collapses (FTX, Terra/Luna, 3AC, Celsius, Mt. Gox), resulting from failures in both business models and oversight. Bitwise contends that stronger US regulation wouldn’t prevent all scandals but would significantly curb them by reducing the influence of offshore bad actors operating outside regulatory frameworks.
The report further suggests that the volatility and significant drawdowns (70%+) in crypto have deterred institutional investment. However, the elimination of the wildcard risk associated with offshore implosions, due to clearer regulations, could significantly reduce the frequency of these extreme crashes.
Bitwise dismisses concerns about political reversals, citing the bipartisan support for the GENIUS Act (68-30 Senate vote) and the growing involvement of Wall Street. As major institutions increase their crypto holdings, and individual investors join them, the report concludes that cryptocurrency will become deeply embedded within the financial system, making it too significant to ignore or unwind. The company’s confidence is further underscored by its recent addition of proof of reserves for Bitcoin and Ether ETFs.
