Bitwise: U.S. Crypto Legislation Could Unlock Billions in Institutional Investment

Landmark legislation advancing through Congress could transform the crypto landscape by reducing risk and opening the door to institutional adoption, according to a report published Monday by asset manager Bitwise.

The firm argues that regulatory clarity is the missing piece preventing major financial players like JPMorgan (JPM), BNY Mellon (BK), and Nasdaq (NDAQ) from fully entering the crypto space. With clearer rules in place, these institutions would be able to build more confidently in the ecosystem, unleashing billions in investment and enabling the transition of trillions in traditional assets onto blockchain infrastructure.

“The infrastructure is already here,” Bitwise wrote. “It just needs Washington’s green light.”

This week, the U.S. House of Representatives is set to vote on two key bills: the CLARITY Act, which defines crypto market structure, and the GENIUS Act, focused on stablecoin regulation. While the latter has already passed the Senate with a 68–30 bipartisan vote—including support from 18 Democrats—the former still faces pushback. On Monday, the top Democrat on the Senate Agriculture Committee called for major changes to the market structure bill.

Bitwise CIO Matt Hougan emphasized the potential significance of these bills: “If they pass, you can’t put the genie back in the bottle.”

According to Hougan, the more transformative shift could be in how regulatory clarity reduces systemic risk. Crypto’s history has been marred by collapses—from Mt. Gox and Celsius to Terra/Luna and FTX—largely due to weak or nonexistent oversight. Hougan argues that while legislation wouldn’t have prevented every failure, it likely would have stopped many.

Bitwise also noted that crypto’s high volatility and repeated 70%+ drawdowns have kept large institutions on the sidelines. By eliminating the “wildcard risk” associated with offshore platforms, U.S. regulation could help stabilize the market and reduce the severity of future crashes.

The political tide also appears to be shifting in crypto’s favor. The GENIUS Act’s bipartisan backing signals growing alignment in Washington, and Bitwise believes institutional demand will reinforce that momentum.

“As Wall Street firms like BlackRock and JPMorgan build out their crypto strategies—and as millions of Americans gain exposure—crypto will become too embedded to ignore, and too vital to unwind,” the report concluded.