Hogan, the Chief Investment Officer at Bitwise, said he is increasingly concerned that the U.S. Congress will stumble on the issue of cryptocurrency regulation, warning that the sector will face a difficult summer if legislative efforts fail.
Hogan remains optimistic about the future of cryptocurrencies this year, with fundamental expectations that most digital assets will reach all-time highs, and Bitcoin's price will rise to over $200,000. However, despite the seemingly positive backdrop under the Trump administration, politicians could still derail the path of cryptocurrencies.
Cryptocurrencies saw a rebound after the U.S. presidential election in November, partly due to the assumption that Washington would take a more positive stance toward them. The first hundred days of the Trump administration saw the establishment of a strategic Bitcoin reserve, the designation of digital assets as a "national priority," the SEC's dismissal of lawsuits and accounting rules related to cryptocurrencies, and the end of the choke point 2.0 process. However, Hogan warned in a memo to clients late Monday that all these initiatives stemmed from the White House, meaning it would be easy for future administrations to roll them back.
He said: "To move forward in the cryptocurrency space, we need Congress to pass legislation that establishes standards of progress in this area." He added: "The passage of at least one bill on cryptocurrencies by Congress would demonstrate the ability of Democrats and Republicans to agree on it, making it harder for future administrations to roll back this progress."
■ The Stablecoin Bill Disaster
Hogan expected the stablecoin legislation to pass quickly this year, expanding the reach of cryptocurrencies into traditional markets, creating a new profit center for Wall Street, and providing a massive buyer for U.S. debt as a tool to expand the global dominance of the dollar. He said: "Everyone wins."
In mid-March, it seemed to be on the right track, as the Senate Banking Committee voted 18 to 6 to advance the stablecoin bill, called the GENIUS Act, out of committee, as Hogan noted. In that vote, five Democrats on the committee broke ranks to support the bill, which was also backed by Senate Minority Leader Chuck Schumer.
The bill requires that stablecoins be backed by a 100% reserve in U.S. dollars and short-term Treasury bonds (or similar liquid assets), monthly public disclosure of reserves, and annual audits for issuers with a market capitalization exceeding $50 billion. The bill also sets strict marketing standards, guidelines for bankruptcy procedures, and other provisions.
However, over the weekend, nine Democrats, including four of the five who supported the bill in committee and Schumer himself, withdrew their support just days before the bill was set for discussion in the Senate. Democrats argued that the bill needs stronger provisions regarding national security and anti-money laundering policy.