Crypto Market Faces Turbulence Without Key Legislation This Summer

Bitwise's Chief Investment Officer, Matt Hougan, has issued a warning that the digital asset market could face significant turbulence this summer if key crypto legislation is not passed by lawmakers in Washington. Despite the early momentum under President Donald Trump’s administration, Hougan cautions that the recent gains in the crypto market remain fragile without the necessary legal safeguards from Congress. Political gridlock, he warns, could undermine investor confidence just as the industry is on the cusp of broader acceptance.

Hougan expressed concern that the opportunity for lasting reform may be lost if Congress fails to advance bills addressing stablecoins and digital asset market structure. He noted that while the regulatory groundwork laid in the administration’s first 100 days was impactful, it relies heavily on executive authority and could be reversed by a future administration. Early changes included the establishment of a US Bitcoin (BTC) Strategic Reserve, the classification of digital assets as a national priority, and the rollback of SEC lawsuits and restrictive accounting guidance. The end of what industry leaders called “Operation Choke Point 2.0,” a pattern of regulatory pressure on crypto banking access, was also seen as a significant turning point.

However, Hougan emphasized that without legislative action to codify these changes, future administrations could undo them without legislative friction. He highlighted that even one passed bill, such as the proposed stablecoin framework, could demonstrate bipartisan alignment and reduce regulatory uncertainty. Unfortunately, the Stablecoin GENIUS Act, which cleared the Senate Banking Committee in March with bipartisan support, lost critical backing days before it was expected to advance. Nine Democratic senators, including Senate Minority Leader Chuck Schumer and four others who initially supported the bill, withdrew their support due to national security and anti-money laundering concerns.

The bill would have imposed strict requirements on US dollar-pegged stablecoins, mandating full reserve backing with liquid assets such as cash and short-term Treasuries. Issuers with market capitalizations exceeding $50 billion would be subject to annual audits, monthly disclosures, and compliance standards addressing insolvency and marketing practices. Hougan previously stated that the passage of a stablecoin bill would not only open crypto to traditional financial infrastructure but also boost global demand for US government debt and expand the dollar’s role in cross-border payments.

Despite the setback, Hougan remains optimistic that digital assets could reach record highs this year if Congress delivers legislative clarity. He projected that Bitcoin could rise above $200,000 under the right policy conditions. However, he warned that failure to act would leave the market vulnerable heading into a politically charged summer. Hougan's analysis underscores the critical need for legislative action to ensure the stability and growth of the digital asset market, highlighting the potential risks and opportunities that lie ahead.