According to a Pew Research Center survey conducted in July, 16% of Americans say they have invested in, traded or used a cryptocurrency. If federal regulation is achieved, then experts said investments could increase, specifically on the institutional side.
"It would give more clarity to a whole host of investors that have been waiting on the sidelines to see that type of clear regulation applied," Mr. Salm said.
Sheila Warren, San Francisco-based CEO for the Crypto Council for Innovation, a global alliance of crypto leaders, agreed but made a distinction between institutional investors and retail investors.
"I think you're going to see a tremendous amount of engagement institutionally; retail, I'm not actually sure it's going to change that much," she said. "What I hope is that you'll see retail able to make more educated and sophisticated decisions about what to invest in."
The effect on investments could also depend on what type of regulation is achieved, according to Teresa Goody Guillen, partner at Baker & Hostetler LLP and a former litigation counsel for the SEC.
"For example, if regulation results in cost-prohibitive or impracticable requirement, that tends to have a chilling effect on investment in the industry, which can also negatively impact the innovation in the industry," Ms. Goody Guillen said in an email. She added that if regulation "fosters the development of the technology," then investment often increases.
It is likely that regulation will consist of "both a legislative solution and additional administrative solutions out of various regulators," said Aliceson "Kristy" Littman, Washington-based partner at Willkie Farr & Gallagher LLP, co-head of its digital works practice and a member of the securities litigation and enforcement practice.
"I think there's still a lot of work to do to build a system that gives industry a clear path to regulatory compliance," she said.