Bitwise CIO Matt Hougan said the United States’ adoption of a comprehensive stablecoin legislature could mark the long-awaited mainstreaming of cryptocurrencies.
In a note to clients, Hougan theorized that stablecoin regulation could have a much larger impact than the wildly successful spot Bitcoin (BTC) ETF.
“The launch of a Bitcoin ETF in the U.S. is typical of this transition, but it is not the only path. Other examples include BlackRock launching a tokenized Treasury fund on the Ethereum blockchain, Europe passing comprehensive cryptocurrency legislation, and Ray Dalio urging investors to own “non-debt currencies” like Bitcoin. “There are things like that.”
Matt Hougan, Bitwise CIO
Sorting the stars for stablecoins in the US
Hougan pointed to several indicators that suggest the U.S. Congress is close to unveiling a framework to oversee fiat-pegged cryptocurrencies.
The Lummis-Gillibrand Payment Stablecoin Act was recently introduced in the Senate, garnering support from lawmakers from various points of the political spectrum. However, some in the cryptocurrency industry remain skeptical about the bill’s impact on free speech due to the ban on algorithmic stablecoins.
Last week, Maxine Waters, the ranking Democrat on the House Financial Services Committee, disclosed a deal with committee Chairman Patrick McHenry on stablecoin rules.
Waters told Bloomberg that several members of the committee, including Senate Majority Leader Chuck Schumer and Senate Banking Chairman Sherrod Brown, who is notoriously anti-cryptocurrency, have been informed. He said he was leaning towards policy.
Federal Reserve President Chris Waller, Federal Research Chair Jerome Powell, and U.S. Treasury Secretary Janet Yellen have publicly expressed support for stablecoins, which is a sign of Washington’s push for this particular cryptocurrency sector. It’s a sign that ‘s approach may have been reversed.
Bipartisan interest sparked by three catalysts
According to Bitwise CIO, there are three main reasons for the narrative shift: First, a coin pegged to the US dollar could solidify global USD dominance by giving more investors access to the popular dollar currency.
Additionally, if the bill passes, demand for U.S. Treasury bonds will increase. The stablecoin issuer is already ranked 16th among the largest independent government bond holders globally.
Incorporation into the traditional financial system will allow existing players, such as banks, to fight back against Tether’s dominance. The USDT provider has 125 employees but generated $6.2 billion in revenue last year. This compares to the $8.5 billion in revenue that Goldman Sachs achieved with over 45,000 employees. According to crypto.news, researchers at S&P agree with this sentiment.
“This will be the first comprehensive cryptocurrency bill passed by Congress. This could allow large banks like JPMorgan Chase to enter the space, moving from foe to friend in certain aspects of the cryptocurrency/DeFi ecosystem. And millions of people and businesses will gain access to the speed, low cost, and ease of use that cryptocurrency wallets, stablecoins, and blockchain-based payment rails offer.”
Matt Hougan, Bitwise CIO