US SEC Proposal Falls Short of Unlocking Mainstream Crypto Acceptance

Bitwise's Chief Investment Officer Matt Hougan recently spoke about the US Securities and Exchange Commission's (SEC) proposal on cryptocurrency regulation. While he acknowledged that the shift is a positive step, he stated that it doesn't fully open the doors to Wall Street.

The SEC proposed a separate regulatory framework for 'regulated cryptoassets' in August, including exemptions of up to $75 million for 12 months. Hougan noted that institutional money will only accept crypto infrastructure if a series of small and complex rule changes accumulates.

He pointed out that the recent approvals of Bitcoin spot exchange-traded products (ETPs) were just the first step, as large wealth-management platforms still require separate product-by-product approvals and internal sign-offs. Hougan is watching the Rule 611 proposal, which could enable DeFi trading infrastructure to combine with brokerage services.

Despite progress, market fragmentation remains a challenge, with liquidity being dispersed across multiple blockchains under different structures and rules. Hougan believes that standardisation, clearer rules, and interoperability are necessary for growth to translate into actual liquidity.