Bitwise: "Clarity Act Sheds Toxic Clauses, Market Skyrockets"...A Contrarian Diagnosis

▲ Virtual assets, regulation, lawsuit/AI-generated image

Despite the failure of the U.S. Senate to pass the U.S. cryptocurrency market structure bill, the virtual asset market is actually rallying. An analysis suggests that instead of long-term legal certainty, the industry has secured a more favorable and swift regulatory environment.

BeInCrypto reported, citing a memo from Matt Hogan, Chief Investment Officer (CIO) of Bitwise, a virtual asset management firm, that the failure of the U.S. cryptocurrency market structure bill paradoxically acted as a boon for the market. The U.S. Senate rejected the procedural vote for the bill on September 15 with 49 votes in favor and 50 against. Initially, pessimism was dominant, predicting that the legislative failure would curb the market's rebound, but the opposite price increase trend unfolded.

Hogan diagnosed that the failure to pass the bill allowed the industry to avoid fatal compromises that could have suppressed its growth. He explained that thanks to the legislative failure, regulatory authorities such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) were able to quickly introduce more flexible and friendly measures than the proposed bill. He stated, "The virtual asset industry sacrificed long-term certainty but gained better regulations faster."

In particular, the autonomy granted to exchanges to pay stablecoin deposit rewards under the stablecoin regulation bill GENIUS was identified as a key unintended benefit. The decision by traditional banking sectors to reject legislative compromise ironically paved the way for stablecoins to erode the market share of the traditional financial system. Furthermore, an institutional loophole was created for the Securities and Exchange Commission to support asset tokenization platforms and yield-generating tokens.

Weakened policy continuity due to future changes in the attitude of the administration or regulatory authorities remains a primary risk factor. However, it is observed that a return to the era of past regulatory crackdowns will be impossible, as the adoption of blockchain by large financial institutions is already structurally expanding.

Having shed the negative factor of legislative deadlock, the virtual asset market is now on an upward trajectory, powered by the swift support measures from regulatory bodies. Market attention is focused on whether the flexible regulatory environment, gained amidst the turf war among traditional financial sectors, can accelerate the inflow of institutional capital.

[Article Key Summary]

-Matt Hogan, Chief Investment Officer of Bitwise, assessed that the rejection of the U.S. cryptocurrency market structure bill allowed for avoiding toxic clauses and led to swift, pro-crypto regulations.

-The expansion of autonomy for exchanges to pay interest under the stablecoin regulation bill GENIUS served as an opportunity to take market share from traditional banks.

-With the increasing adoption by large financial institutions, a policy retreat to the past is deemed difficult, and a long-term upward trend is expected to be maintained.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses incurred based on it. The content should be interpreted for informational purposes only.*