According to Matt Hougan, the chief investment officer at Bitwise, the crypto industry could tap into the trillions held by the financial advisory sector once U.S. regulators clarify legal uncertainties about the financial instrument.
In a June 4 memo to investors, Hougan pointed out that regulatory ambiguity has been the primary reason financial advisors have refrained from increasing their crypto exposure over the past five years. He expressed belief that the U.S. is finally moving towards clearer regulations, potentially unlocking the $20 trillion financial advisory market for crypto investments.
“Imagine how much of that $20 trillion will flow into crypto once the biggest hurdle is removed,”
Hougan wrote.
“If you think BlackRock’s entry into the crypto space had a positive impact, imagine the effect if all of Wall Street embraced crypto as a standard part of the market, the market will wake up to the fact that we are in a new era for crypto, and when it does, I suspect it will move the industry towards all-time highs. But until it does, there may just be some alpha laying around.”
Hougan noted that a significant shift might be underway, starting last month when the U.S. Securities and Exchange Commission (SEC)’s Staff Accounting Bulletin 12 was repealed by both U.S. Legislative chambers. He also pointed to the U.S. House of Representatives’ passage of the Financial Innovation and Technology for the 21st Century Act (FIT21), which the crypto industry viewed as a victory and the SEC’s approval of spot Ether exchange-traded funds (ETFs) on May 23, despite months of speculation that they would be rejected.
RELATED: U.S. SEC Officially Approves Ethereum ETFs, Public Trading Yet to Start
However, Hougan noted that, despite these advancements, policies have not officially changed in Washington yet. He highlighted President Joe Biden’s veto of the SAB 121 repeal, which he said shows “crypto still has a long way to go.”
“If people understood the ramifications of the shift in [Washington D.C.], the crypto market would be at new all-time highs,”
Hougan argued.
“Even though the tide has turned, the water hasn’t come in yet. Wake me up when the real action happens.”
Hougan concluded by noting that though groundwork is being laid, substantial regulatory changes are still pending.
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