As SEC’s Project Crypto pivot turns regulator from antagonist to catalyst, it’s time to ‘think bigger,’ Bitwise CIO says
"The most bullish document I've read on crypto wasn't written by some yahoo on Twitter. It was written by the chairman of the SEC," Bitwise Chief Investment Officer Matt Hougan wrote in a memo to clients late Tuesday — referring to Paul Atkins' new Project Crypto initiative.Announced in a landmark speech last Thursday titled "American Leadership in the Digital Finance Revolution," Project Crypto seeks to modernize U.S. securities regulation for the digital age, continuing the Trump administration's mission to make America the "crypto capital of the world," and laying out a vision for how financial markets will work in the future.Hougan described Project Crypto as a roadmap for how to invest over the next five years, with Atkins arguing that all assets (including stocks, bonds, and dollars) will eventually move onchain, with DeFi playing a central role, and new blockchain-based business models thriving — marking a diametric shift from past regulatory hostility."It's the most complete vision of how crypto can reshape financial markets that I've read," Hougan wrote. "It's like the chairman of the SEC took all the best ideas crypto supporters have been promoting for the past decade and packaged them in a single speech, along with details on how the SEC can actually make them happen.""I can't imagine reading the speech and not wanting to allocate a significant portion of your capital to crypto; or, if you work in finance, a significant portion of your career," the Bitwise CIO continued, noting that Atkins referred to it as a "generational" opportunity. "A few years ago, I'm not sure my compliance department would have let me say that," he added.As a result, three immediate investing opportunities stand out, Hougan said.Ethereum and other Layer 1sThe first and most immediate opportunity, according to Hougan, is investing in Ethereum and other Layer 1 blockchains that power tokenization and stablecoins, arguing that with Project Crypto set to modernize securities rules and bring U.S. markets onchain, gaining exposure to the underlying infrastructure becomes essential.While Ethereum is the current frontrunner, Hougan cautions against betting solely on today’s leaders — pointing to how early winners in the last financial tech wave faded over time. Instead, he advocates for a basket approach, including assets like Ethereum, as well as Solana, Cardano, XRP, Avalanche, Aptos, Sui, Near, and others, to capture whichever networks emerge as dominant in the new onchain financial system.Having already launched spot Bitcoin and Ethereum exchange-traded funds in the U.S., Bitwise also intends to convert its crypto index into an ETF, alongside offering other single-asset crypto ETFs. That conversion was recently approved, but the action was then quickly stayed pending the commission's review. The Bitwise 10 Crypto Index Fund, which trades under the ticker "BITW," currently consists of exposure to BTC, ETH, XRP, SOL, and DOT, among others, on a market-cap-weighted basis.'Super-apps' like Coinbase and RobinhoodA second major opportunity lies in the rise of financial "super-apps," Hougan said. In his speech, Atkins outlined a vision where broker-dealers can seamlessly offer crypto and traditional asset trading, staking, lending, and more, without navigating a patchwork of state and federal licenses, the Bitwise CIO noted — paving the way for fully integrated platforms.Coinbase and Robinhood are already moving in this direction from opposite starting points — Coinbase from crypto to traditional finance, and Robinhood the reverse, he said. With clear regulatory support, Hougan believes one of them could ultimately become the world's most valuable financial services firm, possibly topping $1 trillion in market cap.DeFi applicationsThe final opportunity centers on decentralized finance, which has long operated in a regulatory gray zone, widely used by crypto natives but largely off-limits to mainstream investors or institutions, Hougan said. In his speech, Atkins acknowledged this disconnect, calling DeFi a conceptual leap that doesn't fit within the traditional framework of intermediary-based financial regulation.With the SEC now recognizing that markets can function without intermediaries, Hougan sees enormous potential. Platforms like Uniswap and Hyperliquid are already processing tens of billions in monthly trading volume, with lending protocols like Aave also registering billions in total value locked, even without regulatory clarity. As regulations evolve, that usage could rise by many multiples, and DeFi tokens like UNI may gain stronger economic ties to their underlying protocols, unlocking substantial value for investors, Hougan said.Time to 'think bigger'Hougan's views echo those of analysts at research and brokerage firm Bernstein, who said earlier this week that Project Crypto could rewrite the rules of Wall Street, describing it as the boldest crypto vision ever from a U.S. regulator, positioning the country to lead global financial transformation.Nevertheless, the key question now is whether markets have already priced in the SEC's shift from crypto antagonist to crypto catalyst — or if assets like Ethereum, Solana, and Uniswap still have room to run, Hougan noted."Maybe," he said. "I've long been bullish about the future of crypto, and I've said that all assets will eventually move over blockchain-based rails. But after reading the speech, I'm realizing I have to think bigger — and move to a faster timeline.""If it wasn't priced in for me, I'm going to guess it wasn't priced in for others," Hougan concluded.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.