The $20 trillion financial advisory sector in the US is being held back from investing more in the cryptocurrency market due to regulatory uncertainty. Matt Hougan, Chief Investment Officer of Bitwise, pointed out that this uncertainty has hindered financial advisors from increasing their cryptocurrency investments over the past five years.
Hougan emphasized that once regulatory clarity is achieved in the US, there is significant potential for expansion in the cryptocurrency market. He noted that resolving legal uncertainties could open the door for trillions of dollars managed by financial advisors to enter the cryptocurrency market.
Comparing the impact to when BlackRock, the world’s largest asset management company, entered the cryptocurrency market, Hougan highlighted the positive effects it had on the market. He suggested that if Wall Street fully embraces cryptocurrencies, it could lead to an even more significant market shift.
While there are signs of progress towards clearer regulatory frameworks for cryptocurrencies in the US, challenges still remain. The recent repeal of Staff Accounting Bulletin 121 and the passage of the Financial Innovation and Technology Act for the 21st Century (FIT21) are viewed as positive developments. Additionally, the approval of spot Ethereum exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) on May 23 is seen as further progress.
Despite these advancements, the cryptocurrency market continues to face obstacles, as evidenced by President Joe Biden’s veto of the repeal of FIT21. Hougan remains optimistic about the future, acknowledging that regulatory clarity could bring significant changes to the market. He noted that there is still untapped potential in the market for those outside the crypto bubble to capture “alpha.”
Hougan stressed the importance of patience, as while progress is being made, the full impact of regulatory changes is yet to be seen. He urged industry professionals to stay informed about political developments related to cryptocurrencies and to conduct their own research due to the high volatility and risk associated with investing in cryptocurrencies.
In conclusion, despite the ongoing regulatory uncertainties, there is hope for a brighter future in the cryptocurrency market. The tide may be turning, but the full effects of regulatory changes are still on the horizon. Investors are advised to stay informed and exercise caution when navigating the volatile cryptocurrency market.