Bitwise: The Crypto Genie Is Out of the Bottle — and It’s Not Going Back

Bitwise: U.S. Crypto Legislation Could Spark Wave of Institutional Investment

New crypto legislation moving through Congress could be a watershed moment for the industry, paving the way for major institutional participation, according to a report from Bitwise Asset Management.

The asset manager argues that regulatory clarity is the missing link preventing firms like JPMorgan, BNY Mellon, and Nasdaq from fully committing to the crypto ecosystem. With a clear legal framework in place, Bitwise believes these institutions could inject billions into the space and help bring trillions in traditional assets on-chain.

“The infrastructure is ready—it just needs the green light from Washington,” Bitwise wrote in the report released Monday.

Two major bills are currently on the table. The CLARITY Act, aimed at establishing a regulatory framework for crypto markets, and the GENIUS Act, which sets rules for stablecoins. While the GENIUS Act has already cleared the Senate with bipartisan support, the CLARITY Act still faces resistance. On Monday, the ranking Democrat on the Senate Agriculture Committee called for revisions.

Bitwise CIO Matt Hougan said the passage of these bills would mark a turning point: “If they pass, you can’t put the genie back in the bottle.”

Hougan emphasized that clear regulation would significantly reduce risk in the space. He pointed to past failures—such as Mt. Gox, Celsius, Terra/Luna, and FTX—as symptoms of a lack of oversight. While not all of them could have been prevented by legislation, many might have been, he noted.

Bitwise also cited market volatility as a key deterrent for institutions. Frequent 70%+ drawdowns and offshore uncertainty have kept many firms on the sidelines. But with U.S.-based regulation in place, that wildcard risk could shrink dramatically.

Momentum may already be building in Washington. The GENIUS Act’s bipartisan approval hints at a broader political shift, and Bitwise believes Wall Street’s growing involvement will only deepen lawmakers’ support.

“As giants like BlackRock and JPMorgan expand their crypto operations, and as adoption spreads among retail and institutional investors, crypto will become too integrated to roll back,” the report concluded.