The US Congress could catalyze a more significant shift than introducing spot Bitcoin ETFs. Bitwise Chief Investment Officer Matt Hougan’s view underscores a pivotal moment for the crypto industry.

Hougan suggests that 2024 could see “groundbreaking” legal frameworks that pave the way for mainstream stablecoin adoption, which might profoundly impact the crypto ecosystem.

A Legislative Leap Forward

Recent remarks by Maxine Waters, Ranking Democrat of the House Financial Services Committee, highlighted progress towards stablecoin regulation.

Waters’ announcement that she and Committee Chair Patrick McHenry are close to finalizing a stablecoin bill indicates bipartisan momentum, which could soon materialize into law.

Matt Hougan emphasized the underappreciated significance of this development in his recent communication to Bitwise clients. He believes comprehensive legislation could anchor stablecoins in the mainstream financial system, potentially enhancing their role in global economics.

Hougan identifies multiple drivers behind the bipartisan push for stablecoin legislation. One significant factor is the potential for stablecoins to “bolster” the US dollar’s dominance as the global reserve currency.

Moreover, stablecoins are major purchasers of US Treasuries, placing them among the top sovereign holders globally.

The economic incentives are equally compelling, according to Hougan. For instance, Tether’s profitability with minimal staff compared to traditional banking giants like Goldman Sachs illustrates the operational efficiency and financial potential of stablecoins. Such dynamics are enticing Wall Street to advocate for entry into the stablecoin arena.

The Bitwise CIO noted:

You can bet your bottom stablecoin: Wall Street is lobbying to be let into the stablecoin game.

The Bigger Picture For Crypto Investors

The passage of stablecoin legislation could redefine the landscape of financial transactions. Institutions like JPMorgan might transition from crypto skeptics to proponents, integrating blockchain technologies into their operations.

Hougan predicts that adopting crypto wallets, combined with the efficiency of blockchain-based payment systems, could soon become standard, driven by innovations such as Stripe’s “pay with stablecoins” feature and Visa’s analytics on rising stablecoin usage.

While stablecoins do not offer appreciation potential, investors can find opportunities in the infrastructure supporting them.

Hougan points to Layer 1 blockchains like Ethereum and Solana, which host substantial stablecoin volumes and many decentralized applications (DeFi).

As the legislative environment becomes more favorable, these technologies are poised for significant growth, reflecting a broader acceptance and integration of crypto into mainstream finance. Hougan concluded:

In other words: Crypto is poised to take another huge leap into the mainstream.

Meanwhile, the stablecoin market remains strong, with a capitalization of approximately $166 billion, according to DeFIllama. In contrast, the inflows and outflows in the spot Bitcoin ETF market have been less substantial, highlighting a shift in investor focus as of now.

Yesterday’s ETF flows by @FarsideUK were negative once again, with $83.6 million of outflows.$GBTC had $82.4 million of outflows. Fidelity did $2.8 million of outflows, Bitwise $3.8 million.

Blackrock holding at 0 for 3rd day in a row.

Price dumped after hours because of DTC… pic.twitter.com/ocUF6zUroH

— WhalePanda (@WhalePanda) April 27, 2024

Featured image from Unsplash, Chart from TradingView

The South Korean tech giants Naver and Kakao are set to finalize their blockchain merger plans with a token launch in June.

According to Newsis, the token launch will take place in the UAE under the new brand name Kaia.

Naver, Kakao Plan June Token Launch

Kakao, the operator of the KakaoTalk chat app, is the driving force behind the Klaytn blockchain and its Klaytn (KLAY) token.

Naver is South Korea’s answer to Google. It operates the Finschia (FNSA) token and blockchain protocol via its Line affiliate.

Line is also a chat app operator and has a range of blockchain and crypto operations that are mainly active in Japan.

The firms have been active in the crypto sector for some time, but appear keen to join forces in a bid to create an East Asian crypto behemoth.

In January, the firms announced their intentions to “merge” their blockchain networks. The companies explained:

“KLAY and FNSA, the native coins of the two blockchains, will be replaced by a new native coin which will be issued based on the combined total amount of KLAY and FNSA.”

Holders of KLAY and FNSA tokens, they said, “will be able to swap for the new native coin upon issuance.”

In a press briefing held in Seoul’s Gangnam on April 30, the companies said they had launched “Project Dragon,” a “consultative body” that would oversee and promote the chain integration process.

The media outlet reported that the tech giant’s “ambition” is “to surpass global layer 1 blockchains such as Ethereum and Solana.”

Kakao Entertainment partners with Billboard to expand K-pop's global reachhttps://t.co/iqyz9kji7u

— The Korea Times (@koreatimescokr) April 18, 2024

Asia’s Biggest Blockchain Platform?

Token launches are still illegal in South Korea since a 2018 ruling banned domestic firms from making initial coin offerings.

As such, the firms have created an Abu Dhabi-based foundation that will complete the launch “by the end of June.”

Tokyo’s unprecedented pressure on Naver over Line data leak threatens bilateral tieshttps://t.co/rF0IdWi1AN

— The Korea Herald 코리아헤럴드 (@TheKoreaHerald) April 29, 2024

Seo Sang-min, the Chairman of the Klaytn Foundation, said:

“The integration project is progressing smoothly and according to plan.”

The media outlet said the combined market capitalization of the existing Klaytn and Finschia platforms is “approximately $1.1 billion.”

It added that “once integration is complete,” Kaia was widely “expected to become Asia’s largest blockchain platform.”

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