Regulation has been a hotly debated topic in the crypto space, and almost everyone with a stake in cryptocurrency has an opinion on it in some form. It’s been a constant battle with the SEC as they attempt to regulate the market, particularly DeFi, and it’s had an impact on the market, for better or worse. Despite this, there has yet to be comprehensive crypto legislation.
Some in the sector are opposed to regulation because they believe it will harm the market, while others are in favor of rules because they believe it will tremendously help the space. One of them is Bitwise’s CIO, Matthew Hougan, who feels that the crypto sector requires regulation to prosper.
Hougan, an ETF expert, recently spoke with Scott Melker on a podcast episode discussing cryptocurrency. He mentioned cryptocurrency restrictions and what they would mean for the market. As the market has expanded, there have been calls to further regulate it, with SEC Chairman Gary Gensler conceding at one time that bitcoin has become a threat to the US economy.
The CIO expressed support for crypto regulation, stating that it is critical for market growth. He stated that the next bull market would be driven by beneficial cryptocurrency rules that would be implemented in the future and that it is closer than most people believe.
“I believe positive regulatory changes will drive the next bull market in crypto, and I believe it will occur sooner than many imagine,” Hougan added. Hougan also discussed bitcoin ETFs, which have recently dominated the market, but explained why these products had not performed as well as everyone predicted.
To begin, the CIO observes that the product is “imperfect.” ETFs, by definition, allow investors to obtain exposure to an asset without really owning it. In the case of bitcoin, investors can gamble on the cryptocurrency’s price without having to buy it. Evidently, this has not been well received by investors who would prefer to keep their bitcoins independently.
Hougan responds to the perception that bitcoin ETFs will allow institutional investors to flood the market with cash. He calls this a “false narrative” and claims that these investors will not use a phone app to provide crypto exposure to their clients. The CIO does not deny the possibility that this could be a feasible choice for institutional investors. Still, he does stress that “the futures product cannot be portrayed as an optimal exposure to the asset.”
