The head of investments at Bitwise, Matt Hougan, believes that regulatory clarity in the United States could unlock the $20 trillion financial advisory industry for the crypto market.
Current Regulatory Barriers
According to Hougan, regulatory uncertainty has prevented financial advisors from increasing their exposure to crypto assets over the past five years. He expressed this view in a June 4 post, emphasizing that the lack of clear regulations is the main barrier to greater crypto adoption among financial advisors.
Potential Impact of Regulatory Clarity
Hougan is optimistic that the U.S. is moving towards regulatory clarity, which could significantly impact the financial advisory industry. “Imagine how much of that $20 trillion will go into crypto when the biggest barrier gets lifted,” he said. He added that if Wall Street accepts crypto as a standard market component, the market could see unprecedented growth.
Recent Political Developments
Hougan highlighted several recent political developments that signal a shift towards regulatory clarity:
- Cross-Party Support: Democrats crossing the aisle to repeal Staff Accounting Bulletin 121.
- Legislative Progress: The House passing the Financial Innovation and Technology for the 21st Century Act (FIT21), seen as a positive step by the crypto industry.
- SEC Approval: The Securities and Exchange Commission approving spot Ether exchange-traded funds (ETFs) on May 23, after months of speculation.
Despite these developments, President Joe Biden’s veto of the SAB 121 repeal indicates that the crypto market still faces significant regulatory hurdles.
Also Read: Bitwise CIO Matt Hougan Celebrates Success of Bitcoin ETFs
Market Readiness and Future Prospects
Hougan believes there is substantial “alpha” to be captured in the crypto market, which remains largely untouched by mainstream financial advisors. However, he noted that many people remain unaware of the potential impact of these regulatory changes. He suggested that if the broader financial community understood the implications of the political shifts in Washington, the crypto market could reach new all-time highs.
While acknowledging that no policies have yet changed in Washington, Hougan remains optimistic. “The tide has changed, but the water hasn’t come in yet. Wake me up when the action happens,” he concluded.
