Crypto's Regulatory Unlock: A Marathon, Not a Sprint

Recent developments in Washington have brought about a positive shift for cryptocurrency enthusiasts. The SEC's Regulation Crypto Assets proposal and President Trump's push for the CLARITY Act are seen as significant steps forward. However, according to Bitwise CIO Matt Hougan, this is only the beginning of a long process.

Hougan believes that Washington's crypto-friendly turn is not the moment that completely unlocks Wall Street. He emphasizes that it comes down to 'a million small steps,' many of which are unglamorous but crucial.

One such example is the SEC's approval of spot Bitcoin ETP listings in January 2024, which initially led to a surge in optimism. However, it took roughly two and a half years for large wealth-management platforms to expand crypto access for their advisors. This is because each platform had to individually approve products, decide which account categories could hold them, clear internal sign-offs, and add them to model portfolios.

Hougan's next concern is fragmentation in the tokenized stock market. He notes that different issuers are creating tokenized versions of the same underlying stocks using different structures, rules, and chains, making it difficult for liquidity to be arbitraged across incompatible pools.