Please closely monitor the developments in Washington.

Written by: Matt Hougan, Chief Investment Officer of Bitwise

Translated by: Luffy, Foresight News

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

I am very optimistic about the prospects for cryptocurrency this year; the current situation is extremely favorable: rising institutional participation, an improving regulatory environment, and significant advancements in blockchain technology.

I believe that this year, the trading prices of most cryptocurrencies will reach all-time highs, with Bitcoin prices rising above $200,000.

However… people often ask me what could derail the development of cryptocurrency from this script. My answer is simple: people; more specifically, politicians.

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

• The U.S. has established a strategic Bitcoin reserve, holding nearly 200,000 Bitcoins.

• The White House has listed digital assets as a "national priority."

• The U.S. Securities and Exchange Commission (SEC) has almost withdrawn all unreasonable lawsuits related to cryptocurrency.

• The SEC has rescinded SAB 121 (a set of stringent accounting rules for cryptocurrency) and allowed more banks and broker-dealers to operate in this space.

• Operation Choke Point 2.0 has ended, which had previously cut off cryptocurrency companies from traditional banking services.

• Cryptocurrency advocate Paul Atkins has been appointed as the new chairman of the SEC.

• Notable venture capitalist David Sacks has been appointed as the "Cryptocurrency and AI Czar" at the White House.

This is an impressive list. However…

We need legislation to solidify the achievements

The commonality among these items is that they all originate from the White House, which means that the next administration could easily overturn these initiatives.

To push the cryptocurrency industry forward, we need Congress to pass legislation that enshrines the progress made in cryptocurrency into law. Congress should pass at least one cryptocurrency bill to demonstrate that Democrats and Republicans can reach a consensus on cryptocurrency issues, 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 pathway for the largest financial institutions in the world to enter the stablecoin market.

After all, stablecoins benefit all parties:

• For the cryptocurrency industry, they broaden market access.

• For Wall Street, they create a new source of profit.

• For Washington, they are major buyers of U.S. Treasury bonds and an effective tool for expanding the dollar's dominance globally.

This is a win-win-win situation.

Until recently, we were steadily moving toward this victory.

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

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

This shift in attitude reflects the ever-changing political environment in Washington. In fact, the revised version of the bill is stronger in terms of anti-money laundering and KYC than the version that passed the Banking Committee, indicating that the Democrats' change in stance is more due to Trump's declining approval ratings and increased discussions about his conflicts of interest related to cryptocurrency, rather than any substantive concerns.

Politics is complex and chaotic. But often, it is more chaotic than necessary.

Equally disadvantageous is that various factions within the cryptocurrency industry are lobbying to combine stablecoin legislation with broader market structure legislation, aiming to create a comprehensive and complete cryptocurrency bill.

This pursuit of perfection hinders the implementation of viable solutions. Market structure legislation is extremely important for the long-term future of cryptocurrency, but mixing various issues together makes it more difficult for any bill to pass.

What happens next

I believe the stablecoin bill will ultimately pass. The benefits of stablecoins are too obvious, making it unlikely that their development will be hindered by some trivial political squabbles.

The coming days and weeks will be challenging. If the legislation fails, this summer could be tough for the cryptocurrency industry. But if Washington can come together, I believe the bull market will be unstoppable.

In either case, please closely monitor the developments in Washington.

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