Latest developments: Edelman told CoinDesk’s Jennifer Sanasie on Markets Outlook that the dispute over whether stablecoins can offer returns threatens progress on market structure legislation.
- Banking groups argue that allowing stablecoin issuers to offer returns would raise deposits from traditional banks.
- Edelman said banks oppose the provision mainly because stablecoins pose a competitive threat to their business models.
- The issue has become a sticking point in the negotiations around The Clarity Acta proposed crypto market structure bill in Washington.
- Despite sticking with crypto in the economy, Edelman said the banking lobby is politically powerful and “will probably win the argument.”
Why it’s important: Edelman argues that the industry should compromise rather than risk losing regulatory clarity altogether.
- “I don’t think it’s the hill to die on,” Edelman said of the battle for the stablecoin dividend.
- He said the broader legislation would provide long-awaited regulatory certainty for crypto companies and investors.
- Prediction markets currently suggest the bill will pass, he said, although the timeline remains uncertain.
- Edelman warned that the bill could stall if it is not passed before the midterm elections.
The market outlook: Edelman believes that regulatory clarity can quickly revive crypto markets.
- If the bill fails, he expects a sharp but temporary drop in crypto prices as investors react.
- In the long term, crypto will still grow, but at a slower pace without supporting legislation.
- If clarity comes, Edelman predicts that crypto prices could rise and quickly reach new record highs.
- He reiterated his long-term forecast that bitcoin could reach $500,000 by the end of the decade.
Reading between the lines: Edelman also pushed back on fears that quantum computers threaten Bitcoin.
- Claims that quantum computers will break the Bitcoin blockchain are “one of the dumbest things I’ve ever heard anyone say,” Edelman said.
- He argued that the industry would develop defensive cryptography along with any advances in quantum computing.
- Even if such machines emerge, attackers are likely to target larger financial systems or infrastructure before Bitcoin.
- Edelman continues to recommend investors allocate up to 40% of portfolios to crypto broadly, mainly focusing on large assets such as bitcoin, ether and solana.
Looking ahead: Edelman expects consolidation among cryptocurrencies as the market matures.
- He predicts that about a dozen major cryptocurrencies will eventually dominate the sector.
- At the same time, tokenization could create hundreds of thousands of blockchain-based tokens representing assets such as real estate, commodities, and collectibles.
- That shift could dramatically expand diversification opportunities for investors.
