New legislation in the crypto market could provide a much-needed boost to anxious crypto investors.
The crypto market may seem to be in free fall at the moment, but there is a major catalyst on the horizon that could change the situation sooner than expected: the introduction of groundbreaking new legislation to the crypto market.
Right now, there are two major pieces of legislation in the crypto market that could be dropped as soon as this summer. These new crypto regulations could lead to a wave of institutional adoption and make it easier for risk-averse institutional investors to gain exposure to the crypto asset class. Here’s what to expect.
The engineering law
Although the Genius Act for stablecoins was officially enacted last July, it is only now entering the implementation phase. In other words, the crypto market is poised to gain a formal legal and regulatory framework for stablecoins this summer. The new rules will cover everything from reserve standards and audits to how stablecoin issuers will be supervised.
Image source: Getty Images.
Generally speaking, the stablecoin market will soon have official “rules of conduct,” which should be huge for institutional adoption. Remember last summer, when there was breathless speculation about which tech companies, financial services companies, and consumer-facing businesses might introduce their own stablecoins? Well, it’s about to happen, and that means a potential tsunami of new money flowing into the crypto sector.
The Clarity Law
The Digital Asset Market Clarity Act, known simply as the Clarity Act, was supposed to be passed last year, right after the Genius Act. But then came the federal government shutdown, followed by a sudden drop in prices of major cryptocurrencies such as Bitcoin (BTC 1.47%) And Ethereum (ETH +0.16%).
Today’s change
(-1.47%) $-1008.81
Current price
$67562.00
Key Data Points
Market capitalization
$1.4 billion
Daily scope
$66725.00 -$69088.00
52 week range
$60255.56 -$126079.89
Volume
38B
So things are not as simple as they were six months ago. In January for example, Global Coinbase (COIN +1.03%) said he simply could not support the Clarity Act as it is currently written.
Additionally, broad bipartisan support for crypto in Washington, DC, appears to be collapsing. The good news here is that key Trump administration officials — including Treasury Secretary Scott Bessent — are now on the table in support of the Clarity Act, and the idea is that it could be signed into law by July.
The Clarity Act is expected to shift much more regulatory oversight to the CFTC, which is seen as a much more crypto-friendly regulator than the SEC. Additionally, this should make it much easier for Wall Street firms to introduce new financial products, including new exchange-traded funds (ETFs) related to the crypto asset class.
Which cryptocurrencies are now a buy?
The two biggest winners are expected to be Bitcoin and Ethereum, which remain the two most popular cryptocurrencies among institutional investors. But other winners could include any cryptocurrency linked to the future of major financial trends such as stablecoins and tokenization of real-world assets (RWA).
This is why I think market sentiment towards crypto might be way overblown right now. The Crypto Fear & Greed Index is now at 8 out of 100. This amounts to pure panic, and it shouldn’t be. New crypto market legislation that is expected to soon transform the crypto sector from the “Wild West” to a much safer market environment with very clear rules of conduct.
