The crypto sector may be on the brink of a new golden era. On Monday, the US Senate voted with a clear majority in favor of moving forward with a groundbreaking stablecoin bill. According to Matt Hougan, CIO of Bitwise, this move could pave the way for a multi-year bull market in digital assets. He even compared the development to a "marriage of Wall Street and crypto".
The senators voted 66 to 32 in favor of continuing the so-called GENIUS Act. Even 16 Democrats, who had expressed their opposition last week, changed their minds and signaled cross-party support. Leading figures in the crypto industry and lawmakers celebrated the vote as a "historic victory" that could help "secure the dominance of the US dollar". However, before the bill can be finally passed, possible amendments still need to be approved and a final vote held after this procedural vote.
"The politicians in Washington did the right thing," Hougan wrote in a message to his clients late on Tuesday. "I don't want to call the day before the night, but it looks like we'll have the first full-fledged crypto bill in the US by the summer."
Bigger than Bitcoin ETFs?
Aside from the approval of spot Bitcoin ETFs in January 2024, this is the most significant regulatory milestone in the history of cryptocurrencies, according to Hougan. Possibly even more significant.
However, there are also critical voices. Some warn that the Stablecoin Act could create a backdoor for a central bank digital currency (CBDC). Democratic Senator Elizabeth Warren also criticized the bill for ignoring President Trump's crypto connections and family ties to World Liberty Financial's USD1 stablecoin.
A 2.5 trillion dollar market within reach
The GENIUS Act would require full coverage of stablecoins by US government bonds and dollar equivalents and introduce provisions for foreign issuers. Issuers with a market capitalization of over USD 50 billion would also be required to register with federal banking regulators and undergo annual audits. Stablecoin issuers would also have to implement anti-money laundering (AML) regulations for their tokens.
Stablecoins, one of the "killer apps" in the crypto space, have already reached a market capitalization of over USD 236 billion, according to data from The Block. However, they have long existed in a regulatory gray area, noted the Bitwise CIO. The new law would now give them state weight and allow major banks to issue stablecoins, as well as merchants to accept them.
"With these protections, I expect this to be a 2.5 trillion dollar market in no time," Hougan predicted. "Close your eyes and imagine a world where JPMorgan and Bank of America issue stablecoins, where Amazon gives you a two percent discount if you pay with stablecoins instead of Visa, and where it's as common to accept stablecoins as Venmo or PayPal. That's the world we'll soon be living in."
"A truly ingenious move"
For Hougan, stablecoins are just the beginning. Once the transfer of dollars via blockchain networks is normalized and some of the world's largest financial institutions participate, it will only be a small step to move stocks, bonds and other financial assets via the same rails.
"This is the fundamental thesis for investing in non-bitcoin crypto-assets like Ethereum, Solana and the like: that over 100 trillion dollars of financial assets will eventually move through blockchains. The passage of this bill gets that ball rolling," Hougan said. "A truly brilliant move."
CONCLUSION
Matt Hougan's statements carry weight. If the Stablecoin Act is actually passed in this form, it could trigger a new wave of adoption and capital inflow into the crypto sector. Investors stay on board.
