According to Bitwise CIO Matt Hougan, the US Senate voted on Monday to advance groundbreaking stablecoin legislation, which he assessed could pave the way for a multi-year digital asset bull market.
According to The Block on the 21st (local time), senators voted 66-32 with bipartisan support for the GENIUS Act's advancement, including 16 Democratic lawmakers who had opposed it last week.
Crypto leaders and lawmakers praised the vote as a "historic" victory that could help "guarantee US dollar hegemony". However, after the procedural blocking vote, lawmakers must approve potential amendments before the final vote on the bill.
Hougan wrote in a memo to clients late Tuesday that "politicians in Washington did the right thing". He said, "It's not certain yet, but it looks like we'll have the first comprehensive crypto legislation passed in the US by summer".
Beyond BTC rising approximately 155% since the approval of spot Bitcoin ETFs including Bitwise's BITB in January 2024, he assessed this as potentially the most important regulatory milestone in crypto history. He said, "I believe this sets the stage for a long-term and sustained rally of crypto assets beyond Bitcoin. The biggest beneficiaries will be various DeFi assets like ETH, SOL, UNI, and AAVE".
In the hours before the vote, crypto supporters sent over 60,000 emails to senators urging bill support, according to the advocacy group Stand With Crypto. Republican Senator Bill Hagerty, who led the legislation, said, "This groundbreaking and bipartisan legislation will lead America's payment system into the 21st century".
However, not everyone is satisfied with the stablecoin bill, with some warning it could create a backdoor to central bank digital currencies (CBDC). Democratic Senator Elizabeth Warren also criticized the bill, saying it overlooks Trump's crypto connections and family ties to World Liberty Financial's USD1 stablecoin.
The GENIUS Act legislation will mandate full collateralization of stablecoins with US Treasury and dollar equivalents and introduce provisions related to foreign issuers. The bill will also require federal bank regulatory agency registration and annual audits for issuers with market capitalization exceeding $50 billion. Stablecoin issuers must also apply anti-money laundering restrictions to tokens.
As one of crypto's "killer apps", stablecoins have already grown to over $236 billion in market capitalization according to The Block's data dashboard. However, as Bitwise's CIO mentioned, while they have long existed in a regulatory gray area, this bill will put federal weight behind them and enable large banks to issue stablecoins and merchants to accept them.
Hougan said, "With these safeguards in place, I expect this to soon become a $250 billion market". He added, "Imagine a world where JP Morgan and Bank of America issue stablecoins, Amazon offers a 2% discount for purchases using stablecoins instead of Visa, and accepting stablecoins becomes as common as accepting Venmo or PayPal. That's the world we'll soon be living in".
From Hougan's perspective, stablecoins are just the beginning. As some of the world's largest financial institutions participate and dollar movement through blockchain networks becomes normalized, moving stocks, bonds, and other financial assets through the same rails will be a small step.
He said, "This is the fundamental thesis for investing in non-Bitcoin crypto assets like ETH and SOL. Over $100 trillion in financial assets will eventually move through blockchain. The bill's passage starts the ball rolling downhill" and called it a "truly genius bill".
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