Markets
US Political Shift Could Drive Crypto Market to New Highs
In recent weeks, the US political environment has shown signs of changing stance towards the crypto industry. Bitwise Chief Investment Officer (CIO) Matt Hougan believes this evolving attitude could take the crypto market to new highs.
Despite the widespread lack of attention outside the crypto community, this policy shift could represent a significant opportunity, or “alpha,” for investors. Alpha is a term in the crypto market that refers to information that has the potential to give the trader an edge and outperform the market.
Bitwise: Regulatory Clarity Could Bring Crypto to $20 Trillion Markets
Hougan comments that a change began on May 8, when the Chamber voted in favor HJ Res. 109, revoking Personnel Accounting Bulletin No. 121 (SAB 121). SAB 121 is the USA Security and Exchange Commission (SEC) rule that prevents large banks from holding crypto assets.
That bipartisan support extended to the Senate. Although President Joe Biden vetoed the billthis passage marked the first positive legislative action for cryptography in US history.
See more information: Crypto regulation: what are the benefits and drawbacks?
On May 20, the Chamber voted on the Financial Innovation and Technology for the 21st Century (FIT21) bill. This Comprehensive Crypto Legislation Grants Primary Oversight to the Commodities Sector Futures Trading Commission (CFTC). However, both SEC Chairman Gary Gensler and President Joe Biden expressed their opposition to the FIT21 bill.
This momentum continued with the SEC Approves Registrations for Ethereum (ETH) Exchange-Traded Funds (ETFs). The decision is surprising given Gensler’s stance on the FIT21 bill. The approval, however, came with the condition of removing aspects of staking.
Hougan sees that the positive global shift in Washington’s attitude holds significant potential for growth. He believes regulatory uncertainty has been a major barrier for financial advisors who generate an estimated $20 billion in wealth. According to Bitwise, 64% of advisors cited this uncertainty as the main reason for limited exposure to cryptocurrencies in their portfolios.
“Imagine, then, how much of that $20 trillion will go to crypto when the biggest barrier is removed,” Hougan outlined.
Additionally, Hougan uses major Wall Street banks such as the Bank of New York, Nasdaq, and State Street Bank as examples. He notes that these banks have been hesitant or slow to enter the crypto space due to regulatory concerns. However, with regulatory clarity, they could now fully embrace crypto, which would significantly boost the market.
Encryption is a bipartisan issue
Experts believe that the upcoming elections have a strong influence the Biden administration’s change of position towards the crypto industry. BeInCrypto reported that several prominent industry figures have urged the community to support pro-crypto candidates.
Major entities including Ripple and Coinbase have shown their support for the donating significantly to Fairshake, a Super Political Action Committee (PAC) favorable to digital assets. With the rise of these movements, the crypto community has a unique opportunity to influence the political environment.
Additionally, former President Donald Trump, who is also running in the presidential election, strategically targeted campaigns focused on cryptocurrencies. Trump has expressed his comfort with encryption and accepted donations in cryptocurrencies.
He also promised a more welcoming approach to the industry, criticizing current US regulatory measures as hostile. Ultimately, he urged those who are in favor of crypto to vote for him.
Despite the difference between the two leading candidates, the Grayscale report shows that encryption is a bipartisan issue, with similar ownership rates among Republicans (18%) and Democrats (19%). Voters are divided over which party is more pro-industry.
See more information: How does regulation affect crypto marketing? A complete guide
Inflation and the state of the economy are among the issues valued by Republicans. Source: Shades of gray
Thirty percent believe the Democratic and Republican parties have the most favorable positions regarding crypto policies, suggesting balanced interest across the political spectrum.
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