Stablecoin Bill Stumble Threatens Crypto’s Momentum—Bitwise Sounds the Alarm
Regulatory gridlock strikes again. The crypto market—fresh off institutional adoption highs—now faces a liquidity crunch as stablecoin legislation hits a wall in Washington. Bitwise’s research team warns this could hand the advantage to offshore rivals while US innovators play catch-up.
Why it matters: Stablecoins aren’t just trading pairs—they’re the plumbing for DeFi’s $100B ecosystem. Lose the bill, and you’re choking the industry’s oxygen supply just as institutions start dipping toes in.
The irony? Traditional finance spent years dismissing crypto as ’too risky’—now their beloved regulators might strangle the one innovation that actually brings stability to volatile markets. Talk about cutting off your nose to spite your face.
Bitwise CIO addresses legislative hurdles facing US stablecoin bill passage
Bitwise CIO Matt Hougan shared in a note on Tuesday that the crypto market could face a "challenging summer" due to rising political factors.
Political influence led to several wins for the industry since President Trump’s election. This includes the creation of a Strategic Bitcoin Reserve, the reversal of the Staff Accounting Bulletin 121 (SAB121) and the repeal of Operation Chokepoint 2.0, among others.
However, Hougan highlighted that another political administration could overturn the progress so far, considering that it mostly emanated from the White House.
"People often ask me what could derail crypto. My answer is simple: people. More specifically, politicians," wrote Hougan.
He noted that legislators need to convert at least one crypto bill into law to ensure future political interests don’t ruin the progress made to crypto.
"Congress passing at least one crypto bill would show that Democrats and Republicans can align on crypto and make it more difficult for future regimes to undo progress," said Hougan.
Hougan sees stablecoin regulation as the right starting point for securing the crypto market’s future. However, recent shifts in legislative support for the GENIUS bill may weigh on crypto’s regulatory progress so far.
Senate Republicans had planned to hold a potential procedural vote on Thursday, but nine Democratic lawmakers withdrew their support for the bill over the weekend. In a joint statement on Saturday, the lawmakers pointed out concerns about AML gaps, national security risks and threats to financial system stability. Notably, four of the senators who filed the statement had previously supported the bill during the Senate Banking Committee markup in March.
The sudden turn follows Democrats’ criticism of President Trump’s ties to crypto projects, particularly with events such as the upcoming TRUMP dinner and what others have alleged as "shady" family deals.
Still, Hougan expressed confidence that the GENIUS Act will fly, citing that the growing importance of stablecoins in the US makes it hard for lawmakers to resist.
