Bitwise Chief Investment Officer Clear US Regulations Could Open Cryptocurrency to 20 Trillion Financial Advisory Sector
Regulatory uncertainty has been a major obstacle preventing financial advisors from increasing their exposure to cryptocurrencies over the past five years. However, recent political developments in Washington, such as the House passing the FIT21 Act and the SEC approving spot Ether ETFs, indicate that the U.S. is moving towards providing regulatory clarity for crypto.
If these regulatory uncertainties are resolved, the $20 trillion financial advisory industry in the U.S. could potentially enter the crypto space. Despite the significance of these policy shifts, the market seems to be undervaluing their potential impact, presenting an opportunity for investors to capture “alpha” in the crypto market.
Matt Hougan, chief investment officer at Bitwise, a leading crypto asset manager, believes that the resolution of legal uncertainties could expose the crypto space to the country’s $20 trillion financial advisory industry. For the past five years, regulatory uncertainty has been the primary factor preventing financial advisors from increasing their exposure to cryptocurrencies. A recent survey by Bitwise revealed that 64% of advisors cited this as their top challenge in accessing the asset class.
Recent political developments in Washington, such as the House passing the Financial Innovation and Technology for the 21st Century Act (FIT21) and the SEC approving spot Ether ETFs, suggest that the U.S. is finally moving towards a clearer regulatory framework for cryptocurrencies.
The potential impact of these policy shifts on the crypto market cannot be overstated. If the regulatory barriers are lifted, the crypto space could gain access to the vast wealth managed by U.S. financial advisors, estimated at around $20 trillion. Despite the significance of these developments, the market seems to be undervaluing their potential impact.
Hougan notes that investors outside of the crypto bubble appear uninterested in these news, as the concrete benefits of such regulatory changes are “too far removed.” This lack of interest, however, presents an opportunity for savvy investors to capture “alpha” in the crypto market. If the market were to fully appreciate the implications of the shift in Washington, Hougan believes that crypto prices would already be at new all-time highs.
It is important to note that while the tide has turned in favor of crypto, no policies have actually changed in Washington yet. The repeal of SAB 121 was vetoed, FIT21 is unlikely to pass the Senate before the November elections, and the approved spot Ether ETFs have yet to launch. However, the shifting political landscape in the U.S. has the potential to usher in a new era for cryptocurrencies. If regulatory clarity is achieved and the financial advisory industry embraces digital assets, the market could experience a significant surge in demand and liquidity. As mainstream acceptance grows, the crypto market may indeed rapidlyy move towards new all-time highs.
