The market is underestimating the significance of Washington’s evolving attitude toward cryptocurrencies, according to Bitwise CIO Matt Hougan. He believes that the US political landscape regarding crypto has changed significantly toward a more positive stance in recent weeks. Hougan stated that the market would have already been at a new all-time high if its impact had been priced in. Historically, crypto has been a partisan issue, with Republicans generally supporting it and Democrats showing resistance.
Crypto advocates have been strategically building political influence, resulting in significant legislative actions. For example, on May 8, 21 House Democrats voted alongside Republicans to repeal SAB 121, a controversial SEC rule that restricts large banks from holding crypto. The Senate followed suit, with 10 Democrats, including Senate Majority Leader Chuck Schumer, supporting the repeal. This marked the first positive legislative action on crypto in US history.
Despite these advancements, crypto still faces ongoing political challenges. President Joe Biden recently vetoed the repeal of SAB 121, highlighting the complex regulatory environment. However, Hougan sees these developments as a turning point. He believes that once the regulatory uncertainty is lifted, a significant portion of the estimated $20 trillion managed by US financial advisors could flow into crypto. The potential impact on Wall Street could also be substantial if major financial institutions fully embrace crypto as a mainstream asset.
Market Recognition
Hougan argues that the broader market has yet to recognize the implications of these political shifts. Regulatory uncertainty has long been a primary concern for financial advisors and Wall Street institutions. A recent Bitwise survey revealed that 64% of US financial advisors cite regulatory uncertainty as the main barrier to greater crypto exposure in their portfolios. However, Hougan believes that this presents an opportunity for savvy investors as the market slowly wakes up to the fact that we are in a new era for crypto.
The political landscape surrounding cryptocurrency is rapidly evolving, with significant legislative actions and shifting attitudes in Washington. Despite ongoing challenges, such as regulatory uncertainty and political resistance, there is a growing opportunity for investors as the market begins to recognize the potential implications of these changes. It is crucial for investors to stay informed and adapt their strategies accordingly in order to navigate the shifting political environment surrounding cryptocurrency.
