‘You Can’t Put the Genie Back’: Bitwise CIO Reveals Why Crypto May Never Be the Same Again

The conversation around cryptocurrency in the United States appears to be entering a new phase as key legislation gains traction in Congress. According to Bitwise Chief Investment Officer Matt Hougan, the passage of several pro-crypto bills under discussion in Washington could have lasting implications for the market.

In a note to clients, Hougan emphasized the long-term structural shift underway, stating that once these bills pass, “you can’t put the genie back in the bottle.”

The legislative push, dubbed “Crypto Week” by Hougan, follows a declaration by the US House of Representatives to advance three major pieces of digital currency-focused legislation.

These include the GENIUS Act, which aims to establish a regulatory framework for stablecoins; the CLARITY Act, designed to regulate broader digital currency assets; and the Anti-CBDC Surveillance State Act, which would prohibit the introduction of a US central bank digital currency (CBDC). The GENIUS Act has already cleared the Senate, placing it a step closer to becoming law.

Legislative Clarity Could Reduce Structural Risk in Crypto

Hougan argues that regulatory clarity could play a pivotal role in reducing systemic risk across the digital asset industry. He noted that many of the high-profile failures in the digital currency space, including FTX, Terra (Luna), Celsius, and Mt. Gox, were enabled by a lack of oversight.

In the absence of defined rules, offshore platforms with inadequate internal controls and auditing were able to thrive, resulting in significant losses for users.

He contends that proper legislation could have prevented such failures. “If clear regulations had allowed safer versions of these services to exist in the US, many of the historical blow-ups might not have occurred,” Hougan stated.

Regulatory guidelines, according to the note, could also facilitate entry for traditional financial institutions, allowing for crypto custody and services through familiar, regulated channels. That shift could improve investor confidence and potentially limit the frequency and severity of market drawdowns.

Hougan also believes that the passage of these bills could diminish the likelihood of future extreme price crashes. While Bitcoin remains one of the best-performing assets over the last 15 years, its history includes multiple drawdowns exceeding 70%. Hougan argues that enhanced regulation could limit the impact of unpredictable events that trigger such volatility.

Bipartisan Support and Institutional Buy-In Signal Lasting Momentum

While some may question whether future administrations could reverse pro-crypto momentum, Hougan remains unconcerned. He pointed out that support for legislation like the GENIUS Act has been bipartisan, passing the Senate 68-30 with significant backing from both Democrats and Republicans.

He attributes this cross-party alignment not only to generational voter interests but also to Wall Street’s growing involvement in crypto.

According to Hougan, as financial institutions like BlackRock, JPMorgan, and Morgan Stanley expand their crypto operations, the likelihood of political reversal diminishes. “As a broader array of investors and firms becomes involved in crypto, it will be increasingly difficult for politicians to align against it,” he said.

Should these legislative efforts succeed, Hougan concludes that crypto is positioned to transition further into the mainstream. With clearer rules, reduced risk, and rising institutional support, the digital asset market may be entering a new era of growth and maturity.

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