Hougan: SEC Rules Open Few Doors to Full Wall Street Crypto

Bitwise Chief Investment Officer Matt Hougan described recent U.S. regulatory developments as incremental advances for institutional crypto access, not a full opening for Wall Street. The Securities and Exchange Commission published its Regulation Crypto Assets proposal on Aug. 18, which outlines a framework for certain crypto investment contracts and includes exemptions up to $75 million over 12 months. A day later, the White House referenced forthcoming legislation and regulatory engagement around market entrants such as Hyperliquid, and the Financial Accounting Standards Board floated a project to clarify whether some stablecoins qualify as cash equivalents.

Hougan said those moves represent progress but argued that major institutions will need many similar regulatory changes before treating crypto rails as routine market infrastructure. He pointed to the approval process for spot Bitcoin products as an example: although the SEC cleared spot Bitcoin ETP listings in January 2024, wealth-management platforms, account policy teams and internal compliance groups required separate approvals and operational changes before advisers broadly used the products. Hougan estimated that process of platform and operational adoption took roughly two and a half years.

He identified Rule 611, the 2005 trade-through rule created under Regulation NMS, as a specific market-structure barrier. Rule 611 requires trading centers to prevent executions at prices worse than protected quotes elsewhere, a design meant for interconnected equity venues. The SEC proposed rescinding Rule 611 in June, with public comments closing Aug. 17. Hougan said the rule complicates efforts to link decentralized trading venues and broker-dealers and that rescinding it could reduce some structural frictions even if it does not resolve market connectivity on its own. Legal counsel at large firms have reached similar conclusions about how the rule applies in non‑interconnected trading environments.

Hougan also warned about fragmentation in tokenized equity markets. Different issuers are creating tokenized versions of the same underlying stocks on separate chains and under varying custody and redemption rules, which can split liquidity across incompatible pools. “A tokenized stock on entity A isn’t the same as a tokenized stock on entity B. Can’t necessarily be arbitraged,” he said. Market data show tokenized equity market capitalization near $2.8 billion as of Aug. 17, with tokenized stocks comprising about 15% of the broader tokenized real-world-asset market. Monthly transfer volume for tokenized equities is near $23 billion across more than 1.3 million holders.

Hougan described standardization and harmonization of issuance, custody and market access as prerequisites for the consolidated liquidity institutions require. He characterized U.S. market infrastructure as separate rails for different asset classes and identified cross-margining-allowing collateral to be shared across stocks, bonds, derivatives and crypto-as a structural change that would alter how capital is used across portfolios. The SEC and Commodity Futures Trading Commission have listed portfolio margining and cross-margining among joint priorities in their harmonization initiative.

He noted that some commercial activity has continued before final rules. The GENIUS Act became law in July 2025 but implementing rules remain pending. Corporate deals and integrations have progressed, including Stripe’s acquisition of Bridge, Mastercard’s purchase of BVNK, and Circle’s staking of 500,000 HYPE in support of Hyperliquid. Hougan said firms often build or integrate once the regulatory direction looks durable enough, rather than waiting for every rule to be finished.

Hougan outlined three potential outcomes: one in which Rule 611 is rescinded, SEC‑CFTC harmonization advances and standards for stablecoins and tokenized stocks align to enable broader interoperability; a middle path of gradual, layered adoption with slow scaling of access; and a scenario where issuance clarity improves but interoperability and margin rules lag, leaving tokenized versions of the same assets fragmented across separate pools. He described the final shape of institutional crypto access as the result of many technical and procedural rule changes rather than a single landmark decision.