Bitwise CIO: Crypto's Wall Street Unlock Still a 'Million Small Steps'

The SEC unveiled its Regulation Crypto Assets proposal on Aug. 18, a fit-for-purpose framework for certain crypto investment contracts with exemptions reaching up to $75 million over 12 months. A day later, President Donald Trump used a White House crypto event to push the CLARITY Act. Bitwise CIO Matt Hougan called this stretch a good week, but he argued the industry needs to stack dozens more like it before institutions treat crypto rails as ordinary financial infrastructure.

“The brutal real answer is that it comes down to a million small steps,” Hougan told CryptoSlate. “Some of them are deeply unsexy.”

Hougan's clearest illustration came from Bitcoin ETFs. The SEC approved spot Bitcoin ETP listings in January 2024, and the initial reaction assumed the door had opened for everyone. Large wealth-management platforms still needed to approve the products individually and clear internal sign-offs before adding them to model portfolios. Morgan Stanley and Bank of America both expanded crypto access for wealth advisers only within the past year. BlackRock added its Bitcoin ETF to model portfolios more than a year past launch. Hougan's read is that it took roughly two and a half years for Bitcoin ETF access to move from technically true to genuinely true. He expects crypto's broader regulatory unlock to move through the same layers.

Morgan Stanley, with an Alpha Score of 56/100, and Bank of America, at 60/100, both fall in the Moderate category on AlphaScala's scoring system. BAC stock page MS stock page

Hougan's specific example of an unsexy rule was Rule 611, the trade-through rule created under Regulation NMS in 2005. It requires exchanges and brokers to prevent executions at prices worse than protected quotes displayed elsewhere, a structure built for interconnected equity venues. The SEC proposed rescinding Rule 611 in June, with comments closing Aug. 17. Hougan argued that the rule stands as a real obstacle to something like Uniswap integrating with brokerage services to serve tokenized-stock investors. Skadden has noted the rescission could reduce market-structure challenges tied to applying trade-through requirements to environments that are not interconnected like traditional equity markets.

The tokenized equity market capitalization reached roughly $2.8 billion as of Aug. 17, with tokenized stocks climbing to about 15% of the broader tokenized real-world-asset market, close to three times their share at the start of the year. Separate data put monthly transfer volume for tokenized equities near $23 billion across more than 1.3 million holders. Bybit Adds Meta, Tesla xStocks as Tokenized Equities Hit $1.48B

Hougan remains bullish on tokenized stocks overall, but he expects the space needs standards and normalization before that growth turns into liquidity investors can consolidate and trade against each other. If Rule 611 is removed, his next concern is fragmentation. Different issuers are building tokenized versions of the same underlying stocks using different structures and rules, often on separate chains. “A tokenized stock on entity A isn't the same as a tokenized stock on entity B. Can't necessarily be arbitraged.” That means liquidity meant to represent a single stock can split across incompatible pools.

In Hougan's view, tokenization and Hyperliquid-style infrastructure could eventually collapse separate rails for stocks, bonds, commodities and derivatives into financial super apps where multiple asset classes trade side by side. The concept that could change market structure is cross-margining. Sharing collateral across stocks, bonds, derivatives, and crypto lets capital work more efficiently across a portfolio, instead of holding a separate pool for each product line. SEC Chair Paul Atkins has independently voiced support for super apps that let a single license cover custody and trading across asset classes. The SEC-CFTC harmonization initiative also includes portfolio margining and cross-margining among its joint priorities.

The GENIUS Act became law in July 2025, but its core provisions still depend on implementing rules that federal regulators have not finished writing. Even so, Stripe completed its acquisition of Bridge, Mastercard closed its purchase of BVNK, and Circle expanded its support for Hyperliquid by staking 500,000 HYPE toward becoming a validator. All of that happened before the full regulatory stack settled into place. Mastercard, with an Alpha Score of 71/100, is one of the firms moving ahead despite incomplete rules. Mastercard Tests Single-Audit Stablecoin Compliance With Borderless.xyz MA stock page

Hougan pointed to the FASB proposal covering how certain digital assets could qualify as cash equivalents as another small step in the same direction, the kind of update that shapes balance sheets more than headlines.

The bull case has Rule 611's rescission, SEC-CFTC harmonization, and tokenized-stock standards advancing together over the next year, letting DeFi venues, brokerages, and stablecoin settlement rails begin interoperating in genuine practice. Under that path, Hougan's super-app and cross-margining thesis turns into investable market infrastructure, a step beyond where the argument currently sits.

The bear case is that issuance rules improve while interoperability, margin, and market-access rules lag, leaving multiple tokenized versions of the same assets stuck in separate pools that cannot be easily arbitraged. In that scenario, tokenization keeps expanding in headline numbers while failing to deliver the unified liquidity Hougan says the market needs.

Hougan makes clear that the plumbing question, the one that decides whether Wall Street can use any of it, gets answered rule by unsexy rule.