Cryptocurrency markets are on the verge of a potential transformation influenced by regulatory developments in Washington D.C.
Matt Hougan, Chief Investment Officer of Bitwise, highlights these changes in a memo suggesting they could surpass BlackRock’s impact on the market.
“Washington Awakens: This Is What Alpha Looks Like” unveils the underreported shifts in U.S. legislation and their possible effects on digital assets.
Discover how shifting political climates could reshape the cryptocurrency market, offering unique opportunities for informed investors.
Significant Washington Developments in Crypto Regulation
Matt Hougan’s memo describes evolving attitudes towards cryptocurrencies in Washington D.C., indicating potential market advantages. “Few outside the crypto bubble seem to notice Washington’s evolving attitude toward crypto. That could spell alpha,” Hougan writes, emphasizing recent bipartisan legislative trends favoring digital assets.
Key Legislative Actions and Their Impacts
Hougan notes specific legislative movements, such as the House vote on May 8, where 21 Democrats collaborated with Republicans to repeal the SEC’s SAB 121 regulation impeding large banks from handling digital assets. In another instance, 71 Democrats joined 208 Republicans on May 20 to support FIT21, a bill that positions the crypto-friendly CFTC as a primary regulator.
Despite these advancements, President Biden’s veto of the SAB 121 repeal signals ongoing challenges. Nonetheless, Hougan remains hopeful, stating, “We’ve been sailing upwind for a decade in crypto. Finally, the winds have started to change.”
Unexpected Moves by the SEC
Hougan underscores the surprise approval by the SEC, overseen by Chair Gary Gensler, to list spot Ethereum ETFs. This move, unforeseen by many, marks a critical shift in the regulatory approach toward digital assets. Hougan points out, “I’ve been on the road speaking at conferences […] and, try though I might, I cannot get this story to resonate with people,” highlighting the gap between regulatory actions and public awareness.
Implications for Market Growth
Hougan paints a vivid picture of potential market influx: “Imagine, then, how much of that $20 trillion will go into crypto when the biggest barrier gets lifted.” He references the persistent issue of regulatory uncertainty that has historically deterred U.S. financial advisors from increasing cryptocurrency allocations.
Comparing to BlackRock’s market entry, Hougan posits that comprehensive acceptance by Wall Street could have more significant ramifications. “If you think BlackRock’s move into the crypto space positively impacted the market, imagine if all of Wall Street accepted crypto as a normal part of the market,” he explains.
Conclusion
Hougan concludes with a forward-looking statement: “The market will wake up to the fact that we are in a new era for crypto, and when it does, I suspect it will move the industry towards all-time highs.” He adds a hint of caution, “But until it does, there may just be some alpha laying around.”