Bitcoin’s Surge: The Impact of Regulatory Developments on Digital Assets

While it's not all smooth sailing for digital assets on Capitol Hill, House Speaker Mike Johnson pulled a vote on crypto legislation last night after 13 Republicans raised concerns that could open the door to a US CBDC.

But Trump stepped in and he says that he has persuaded the holdouts to vote in favor of the crypto bills.

Now if crypto we gets back on track, it could boost institutional adoption, a trend already gaining momentum.

Now Bitcoin's record.

123,000 was fueled largely by big money and flows from institutions.

Joining me live here at the New York Stock Exchange this morning is Katherine Dowling, general counsel and chief compliance officer at Bitwise.

Catherine, it's so great to have you here.

Thank you for joining me here.

Thanks for having me.

Well, a lot of developments coming out of DC this week, in particular regarding Crypto Week.

So what do you think is going to happen today?

Well, first of all, thankfully they called it crypto Week and not crypto day because politics is politics and.

It takes more than a day to have these conversations and better they have them now, right?

So there were some concerns with the reading of the Genius Act that it would create a backdoor for allowing for the CBDC to take place and there's a lot of movement against the CBDC because of privacy concerns.

So these conversations took place yesterday and my sources tell me that we're on track today.

It's on track for a vote today, midday, so hopefully.

Things will go a little more smooth from here on out, and we'll see how the rest of crypto week you know unravels.

And Katherine, you bring up a lot of important points and earlier this week in the crypto landscape, Bitcoin hit new record highs, soaring way above that 120,000 level.

So first and foremost for viewers out there, walk us through some of the demand and what you think is pushing prices higher.

Absolutely.

I think some of this regulatory movement is baked into that price, whether it takes.

A little bit longer to get there or not, whether we we're hoping to get a stablecoin bill to the president this week, but either way that forward momentum is clearly visible and that is important in and of itself.

So some of that is baked in because a lot of the institutional capital has been waiting on the sidelines until that regulatory insecurity is solved for and there's a path forward that folks can now see to getting to that.

And again, even if the negotiations and the back and forth, the politics takes place and takes a little bit longer, which it probably will with the Clarity Act because that's a bigger me act.

There's more involved.

The Senate is currently working on their version.

Ultimately, whether we get clarity Acts mushed together with the Senate version, that's just going to be a longer dialogue, but the hope is that that takes place in 2025.

I think that's what you're seeing with the prices, not just for Bitcoin, but for some other digital assets also moving as well because of that clarity and you're also seeing as well, you know, continuation of some of this, the Genzler era cases being dropped and waiting for that, you know, kind of these foundational definitions that were at the heart of the question behind some of the Genzler error cases.

So yeah, and indeed we've had a changing of the guard in 2025, the first half of 2025, filled with plenty of expectations about regulation, but as you mentioned, legislation does take a lot of time.

So here we are kicking off the second half of 2025, and there's still a lot of expectations on the regulatory front.

But the thing is that we have experienced many different hiccups in the past when it comes to the crypto landscape.

So whether we're talking about. or FTX, there are a lot of points in the crypto landscape in terms of history where we were concerned from an investment standpoint and you've been through this.

So tell us why these bills are up.

So really these two bills would have been really helpful to have prior to FGX and Luna because then you might not have had FGX and Luna.

11 area that's important to remember is that in the earlier days of crypto there was this OK, we're not going to.

We're not going to go in and regulate it because if we regulate it, we're going to give it the bonus fide days that it doesn't deserve.

We're going to keep it over here and let it kind of go away, but it didn't go away and it's gotten stronger and I think if we had had a regulatory focus earlier on, that actually would have been a much better way to go about it than now being somewhat reactive.

But what we're also seeing this year that's equally as important as this legislative momentum and movement is we're seeing a Better SEC just like that seems like a light way to put it, but really it's an SEC that's being more transparent, that's talking to the industry.

They're looking to solve for some of these complex definitional questions.

So you're already seeing the SEC responding and acting in a way that we never saw in the Genzler era.

So even though the legislation might take a little longer with Clarity Act and needing to see what the Senate, the Senate's version as well, you're seeing that SEC movement and And working with the industry to come up with better solutions, to talk with the industry, and that in and of itself is so important.

But what the legislation will do that just that you know SEC movement can't do in and of itself is prevent down the line a future administration change from creating new leadership in the SEC that could be more like the Gensler era.

So you you want to avoid that kind of flip flop based on the you know who's in charge at that given juncture of the SEC.

So I think that's what you'll see.

That the legislation will carry the day on that side so that we're not trying to interpret Depression era case law to figure out whether these digital assets are securities or commodities and therefore thus which of the regulatory bodies will be the one in charge of that area.

Yeah, and Katherine, finally, before I let you go, we're hearing the cheers behind us because we are fast approaching the opening bell here at the New York Stock Exchange, but it is also a reminder that here we are at the Stock Exchange, we're talking about crypto and we thought ETFs get quite a welcome here at the New York Stock Exchange once they were first launched and approved, but that process took such a long time.

So what do you think is next when it comes to investor products out there?

What does it mean for retail?

Absolutely, yes.

Well, the first, you know the spot Bitcoin ETFs were huge, you know, we're 18 months in and just the assets that these funds have accumulated has been tremendous.

And that's that's a proof point.

That's a that's a they are working, they are providing investors access to digital assets at Bitwise we're at heart a research organization and we only work on crypto products.

So for us just having that out there and we were pointing for years to other countries's working like we can take this.

Out of the academic and put it into the this product is working and here's what it offers.

It's a regulated wrapper.

It's a tickered product.

It's better for investors than speculation on other assets.

It gives them some of that transparency that's lacking in some of the other assets.

So what we can see on the go forward is a much more communicative. in terms of they're looking to understand how some other products will work beyond Bitcoin and beyond, and that's what's going on right now.

Those are positive dialogues with the SEC, and we look forward to hopefully welcoming more products hopefully later this year.

OK, Katherine, well it was great to have you here.

Thank you so much for joining me here at the New York Stock Exchange.

Thank you.