SEC’s latest crypto rules only open a few of Wall Street’s ‘million doors’ – Bitwise CIO Matt Hougan
Bitwise CIO Matt Hougan does not suppose Washington’s crypto-friendly flip is the second that utterly unlocks Wall Street.
In an interview with CryptoSlate, he described the true barrier as one thing far much less dramatic than a single landmark invoice. The “brutal actual reply” is that it comes right down to a million small steps, and a few of them are deeply unsexy.
The SEC unveiled its Regulation Crypto Assets proposal on Aug. 18, describing a fit-for-purpose framework for sure crypto funding contracts with exemptions reaching as much as $75 million over 12 months.
A day later, President Donald Trump used a White House crypto occasion to push the CLARITY Act. He stated CFTC Chair Mike Selig was working to convey Hyperliquid into the U.S. in a absolutely compliant, authorized method.
A great week for crypto that’s only the beginning
Hougan known as this stretch a good week, pointing to the SEC proposal, the Hyperliquid feedback, and a Financial Accounting Standards Board proposal. That FASB undertaking might make clear whether or not certain stablecoins qualify as money equivalents.
He argued that the business must stack dozens of weeks like this one earlier than establishments deal with crypto rails as peculiar monetary infrastructure.
Hougan’s clearest illustration got here from Bitcoin ETFs. The SEC authorised spot Bitcoin ETP listings in January 2024, and the preliminary response assumed the door had opened for everybody.
Large wealth-management platforms nonetheless wanted to approve the merchandise individually, then determine which account classes might maintain them, then clear inner sign-offs. Only then would they think about including them to the mannequin portfolios that drive most advisor-directed cash.
Morgan Stanley and Bank of America each expanded crypto entry for wealth advisers only throughout the previous 12 months, and BlackRock added its Bitcoin ETF to mannequin portfolios greater than a 12 months previous launch.
Hougan’s learn is that it took roughly two and a half years for Bitcoin ETF entry to maneuver from technically true to genuinely true. He expects crypto’s broader regulatory unlock to maneuver by means of the identical layers.
| Stage | What modified | Why it mattered |
|---|---|---|
| SEC approval | Spot Bitcoin ETPs authorised in January 2024 | Legal availability started |
| Platform approval | Wealth-management platforms reviewed and authorised merchandise | Advisors nonetheless couldn’t broadly use them earlier than this step |
| Account eligibility | Firms determined which shopper/account sorts might maintain them | Access remained segmented |
| Internal sign-offs | Compliance and product groups added further gates | Advisors wanted operational permission |
| Model portfolios | Products entered advisor mannequin portfolios | Access grew to become scalable slightly than one-off |
The trade-through rule as one concrete blocker
Hougan’s particular instance was Rule 611, the trade-through rule created underneath Regulation NMS in 2005. It requires exchanges, brokers, and different buying and selling facilities to keep up insurance policies stopping executions at costs worse than protected quotes displayed elsewhere out there, a construction constructed particularly for interconnected conventional fairness venues.
The SEC proposed rescinding Rule 611 in June, with feedback closing Aug. 17.
Hougan argued that the rule stands as a actual impediment to one thing like Uniswap integrating with brokerage companies to serve tokenized-stock traders. Legal evaluation of the SEC’s proposal helps that logic, although it does not go fairly so far as Hougan does.
Skadden has famous the rescission might still reduce market-structure challenges tied to making use of trade-through necessities to buying and selling environments that aren’t interconnected the best way conventional fairness markets are.
Hougan stated that if Uniswap can compete for tokenized shares and tokenized bonds, it should do exceptionally properly. If Hyperliquid can compete in regulated derivatives markets, the identical applies.
Getting there requires a sequence of regulatory wins, and he stated the business nonetheless has extra to gather.
Clearing that crypto door reveals one other one
If Rule 611 is eliminated, Hougan’s subsequent concern is fragmentation. Different issuers are constructing tokenized variations of the identical underlying shares utilizing completely different constructions, completely different rules, and completely different chains.
He stated:
“A tokenized inventory on entity A is not the identical as a tokenized inventory on entity B. Can’t essentially be arbitraged.”
That means liquidity meant to characterize a single inventory can break up throughout incompatible swimming pools.
The tokenized fairness market capitalization reached roughly $2.8 billion as of Aug. 17, with tokenized shares climbing to about 15% of the broader tokenized real-world-asset market, shut to 3 instances their share at the beginning of the 12 months.
Separate knowledge put month-to-month switch quantity for tokenized equities near $23 billion throughout greater than 1.3 million holders.
Hougan stays bullish on tokenized shares general, however he expects the area wants requirements, normalization, and harmonization earlier than that progress turns into liquidity traders can consolidate and commerce towards one another.
| Step | Bottleneck | Market consequence |
|---|---|---|
| SEC crypto framework | Issuance rules change into clearer | More tasks and establishments can construct |
| Rule 611 | Legacy fairness rules restrict dealer/DeFi integration | Uniswap-like venues wrestle to serve tokenized-stock move |
| Rule 611 rescission | One integration barrier weakens | DeFi venues can transfer nearer to dealer connectivity |
| Tokenized-stock fragmentation | Same inventory can exist in incompatible wrappers | Liquidity splits throughout issuers, chains, and venues |
| Standards hole | Tokens is probably not fungible or arbitrageable | Growth doesn’t mechanically change into unified liquidity |
| Harmonization | Common rules, custody, redemption, and market entry | Tokenized equities change into simpler for establishments to commerce |
Where Hougan thinks this leads
Trump’s Hyperliquid feedback match into a larger structural level Hougan makes about U.S. finance itself.
He stated that the “U.S. monetary market infrastructure is like a bunch of parallel chains for particular person asset courses,” describing separate rails for shares, bonds, commodities and derivatives which might be troublesome to maneuver between by design.
In Hougan’s view, tokenization and Hyperliquid-style infrastructure might finally collapse these rails into monetary tremendous apps the place a number of asset courses commerce facet by facet.
The idea that might change market construction is cross-margining. Sharing collateral throughout shares, bonds, derivatives, and crypto lets capital work extra effectively throughout a portfolio, as an alternative of holding a separate pool for every product line.
SEC Chair Paul Atkins has independently voiced assist for tremendous apps that allow a single license cowl custody and buying and selling throughout asset courses. The SEC-CFTC harmonization initiative additionally consists of portfolio margining and cross-margining amongst its joint priorities.
Hougan’s instance of that sample is stablecoins. The GENIUS Act became law in July 2025, however its core provisions nonetheless rely upon implementing rules that federal regulators haven’t completed writing.
Even so, Stripe completed its acquisition of Bridge, Mastercard closed its purchase of BVNK, and Circle expanded its assist for Hyperliquid by staking 500,000 HYPE towards becoming a validator. All of that occurred earlier than the complete regulatory stack settled into place.
Hougan pointed to the FASB proposal masking how sure digital belongings might qualify as money equivalents as one other small step in the identical path, the type of replace that shapes steadiness sheets greater than headlines.
The FASB undertaking stays underneath improvement, so he argued that establishments don’t wait for each rule to be completed. They transfer as soon as the regulatory path seems sturdy sufficient to justify constructing, buying, and integrating, and that threshold retains getting crossed one unsexy rule at a time.
Whether the plumbing will get fastened collectively or piecemeal
The bull case has Rule 611’s rescission, SEC-CFTC harmonization, and tokenized-stock requirements advancing collectively over the subsequent 12 months, letting DeFi venues, brokerages, and stablecoin settlement rails start interoperating in real observe.
Under that path, Hougan’s super-app and cross-margining thesis turns into investable market infrastructure, a step past the place the argument at the moment sits.
The bear case is that issuance rules enhance whereas interoperability, margin, and market-access rules lag, leaving a number of tokenized variations of the identical belongings caught in separate swimming pools that can’t be simply arbitraged.
| Scenario | What occurs | Result for establishments |
|---|---|---|
| Bull case | Rule 611 rescission, SEC-CFTC harmonization, stablecoin rules, and tokenized-stock requirements advance collectively | DeFi venues, brokers, stablecoins, and tokenized belongings start interoperating |
| Base case | Rules enhance regularly however erratically | Institutions maintain constructing, however adoption stays layered and sluggish |
| Bear case | Issuance readability improves whereas interoperability and margin rules lag | Tokenized markets develop in headline dimension however stay fragmented |
| Structural endgame | Super-apps and cross-margining change into viable | Stocks, bonds, derivatives, crypto, and stablecoins commerce by means of shared infrastructure |
In that situation, tokenization retains increasing in headline numbers whereas failing to ship the unified liquidity Hougan says the market needs.
Hougan makes clear that the plumbing query, the one which decides whether or not Wall Street can use any of it, will get answered rule by unsexy rule.
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