Bitwise Warns: Crypto Regulation Gridlock Fuels Market Chaos as Politicians Dither
Washington’s paralysis hits crypto where it hurts—investor wallets. While lawmakers bicker over committee assignments, $2T in digital assets hang in regulatory limbo.
No rules, no clarity—just the usual circus of partisan posturing. Meanwhile, Wall Street quietly stacks Bitcoin ETFs like Monopoly money.
Here’s the kicker: The longer DC delays, the more exchanges operate in wild west mode. Guess who gets fleeced when the sheriff never shows?
White House offers limited protection
Hougan expressed concern that the opportunity for lasting reform may slip away if Congress cannot advance bills addressing stablecoins and digital asset market structure.
He said the regulatory groundwork laid in the administration’s first 100 days, while impactful, relies heavily on executive authority and could be reversed by a future White House.
Among the early changes since January were the establishment of a US Bitcoin (BTC) Strategic Reserve, the classification of digital assets as a national priority, and the rollback of SEC lawsuits and restrictive accounting guidance.
The end of what industry leaders dubbed “Operation Choke Point 2.0,” a pattern of regulatory pressure on crypto banking access, was also seen as a turning point.
However, Hougan warned that unless Congress enacts laws to codify this progress, future administrations could undo it without legislative friction. He emphasized that even one passed bill, such as the proposed stablecoin framework, could demonstrate bipartisan alignment and reduce regulatory uncertainty.
Stablecoin legislation loses ground in Senate
That effort suffered a setback over the weekend. The Stablecoin GENIUS Act, which cleared the Senate Banking Committee in March with support from both parties, lost critical backing days before it was expected to advance.
Nine Democratic senators, including Senate Minority Leader Chuck Schumer and four others who initially supported the bill, withdrew their support, citing national security and anti-money laundering concerns.
The bill would have imposed strict requirements on US dollar-pegged stablecoins, mandating full reserve backing with liquid assets such as cash and short-term Treasuries.
Issuers with market capitalizations exceeding $50 billion would be subject to annual audits, monthly disclosures, and compliance standards addressing insolvency and marketing practices.
Hougan previously stated that the passage of a stablecoin bill would not only open crypto to traditional financial infrastructure but also boost global demand for US government debt and expand the dollar’s role in cross-border payments.
Despite the setback, Hougan remains optimistic that digital assets could reach record highs this year if Congress delivers legislative clarity. He projected that Bitcoin could rise above $200,000 under the right policy conditions.
However, he warned that failure to act would leave the market vulnerable heading into a politically charged summer.
