The potential passage of a U.S. stablecoin bill could represent a landmark moment for cryptocurrency regulation, sparking a long-term bull market, according to Bitwise.

In a report released Tuesday, Bitwise emphasized that the advancement of the GENIUS Act in the Senate — recently moved closer to a final vote — could usher in the first comprehensive federal crypto legislation in the United States this summer.

“Following the January 2024 approval of spot Bitcoin ETFs, this stands as the most critical regulatory development in crypto history, possibly even surpassing that milestone,” said Matt Hougan, Bitwise’s Chief Investment Officer.

Stablecoins, which are cryptocurrencies pegged to traditional assets like the U.S. dollar or gold, serve as key instruments in digital finance and cross-border transactions.

The GENIUS Act aims to establish federal oversight for stablecoins with market caps over $10 billion, while permitting states to regulate within a framework aligned to federal standards. This is a departure from the House’s STABLE Act, which proposes state regulation without federal harmonization.

Bitwise pointed out the current lack of a unified federal framework governing stablecoins and believes the GENIUS Act could fill this regulatory void.

If enacted, Bitwise predicts a broad crypto rally that extends well beyond Bitcoin (BTC), with significant upside potential for Ethereum (ETH), Solana (SOL), and DeFi projects like Uniswap (UNI) and Aave (AAVE).

The report further anticipates that the stablecoin market could grow rapidly from $245 billion today to as much as $2.5 trillion in the near term.