Regulation
Political change in the United States could propel the crypto market to new heights
In recent weeks, the US political environment has shown signs of a shift in stance towards the crypto industry. Bitwise Chief Investment Officer (CIO) Matt Hougan believes this evolving attitude could take the crypto market to new, all-time highs.
Despite the lack of widespread attention outside of the crypto community, this policy shift may present a significant, or “alpha,” opportunity for investors. Alpha is a term in the crypto market that refers to information that can give a trader an advantage and outperform the market.
Bitwise: Regulatory Clarity Could Take Crypto to $20 Trillion Markets
Hougan notes that a change began on May 8, when the House voted for HJ Res. 109, repealing Staff Accounting Bulletin No. 121 (SAB 121). SAB 121 is the United States Security and the Exchange Commission (SEC) rule that prevents big banks from holding crypto assets.
This bipartisan support extended to the Senate. Although President Joe Biden vetoed the billthis passage marked the first positive legislative action for crypto in US history.
Learn more: Crypto regulation: what are the advantages and disadvantages?
On May 20, the House voted in favor of the FIT21 (Financial Innovation and Technology for the 21st Century Act) bill. This comprehensive crypto legislation places primary oversight on the product. Futures contracts Trade Commission (CFTC). However, SEC Chairman Gary Gensler and Chairman Joe Biden expressed their opposition to the FIT21 bill.
This momentum continued with the SEC Approves Ethereum (ETH) Spot Exchange Traded Fund (ETF) Deposits. The decision is surprising, given Gensler’s stance on the FIT21 bill. The approval, however, came with the condition of removing the staking aspects.
Hougan believes that Washington’s overall positive shift in attitude holds significant growth potential. He believes regulatory uncertainty poses a major hurdle for financial advisors managing an estimated $20 trillion in wealth. According to Bitwise, 64% of advisors cited this uncertainty as the main reason for limited exposure to cryptocurrencies in their portfolios.
“Then imagine how much of that $20 trillion will be spent on crypto when the biggest barrier is lifted,” Hougan describe.
Additionally, Hougan uses major Wall Street banks, such as the Bank of New York, Nasdaq, and State Street Bank, as examples. He notes that these banks have been hesitant or slow to enter the crypto space due to regulatory issues. However, with regulatory clarity, they could now fully embrace crypto, which would significantly boost the market.
Crypto is a bipartisan issue
Experts believe that the next elections will strongly influence the change in position of the Biden administration towards the crypto industry. BeInCrypto reported that several key industry figures have urged the community to support pro-crypto candidates.
Major entities including Ripple and Coinbase have shown their support in make a significant donation to Fairshake, a digital asset-friendly super political action committee (PAC). With the rise of these movements, the crypto community has a unique opportunity to influence the political environment.
Additionally, former President Donald Trump, who is also running for president, has strategically targeted crypto-focused campaigns. Trump expressed comfort with crypto and donations accepted in cryptocurrencies.
He also pledged to take a more welcoming approach to the industry, calling current U.S. regulatory measures hostile. Ultimately, he urged those who are pro-crypto to vote for him.
Despite the gap between the two leading candidates, Grayscale’s report shows that crypto is a bipartisan issue, with similar ownership rates among Republicans (18%) and Democrats (19%). Voters are divided over which party is more pro-industry.
Learn more: How does regulation impact crypto marketing? A complete guide
Inflation and the state of the economy are among the issues valued by Republicans. Source: Shades of grey
Thirty percent believe the Democratic and Republican parties have the most favorable positions on crypto policies, suggesting balanced interest across the political spectrum.
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