The SEC is Paving the Way for the $100 Trillion Trade
Kia ora!
I visited Stewart Island two months ago. Here's a pic I took when I flew over.
It's at the very bottom of New Zealand with a population of 400. I drove the whole island in about twenty minutes.
It's my dream to have a holiday house here in the next ten years.
The thing that cracked me up was the driving.
Every single car that passed me, the driver would wave. Not a polite nod, a full wave. If the road narrowed to one lane, someone would just pull over and gesture you through.
There were no signs, traffic lights, and road markings. Just people who all knew each other, figuring it out.
That's what happens when there are twelve cars on the road.
Now imagine a thousand strangers show up on Stewart Island tomorrow.
What happens?
Chaos.
And anyone watching from the outside says "I'm not driving there."
That's exactly what happened to crypto.
Yesterday I talked about trust; how it doesn't scale, and how the financial system spends hundreds of billions compensating for its absence.
That's why we need regulation.
You can build the fastest car in the world, but it doesn't matter if there's no road or rules to drive it.
That's what every previous crypto cycle did. Showed up with incredible technology and said "look how fast this is." And institutions said "great, where do I drive it? What are the rules? Which side of the road do I stay on? What happens if I crash? Who's liable?"
There were no answers.
So they didn't drive.
And I want to be really clear about this: they were prohibited legally from participating.
Think about what it actually takes for a bank to engage with a new technology. Their compliance team needs to classify it, their legal team needs to understand the regulatory treatment, their custody team needs a framework for holding it, their risk team needs to model it.
Every single one of those functions requires regulatory clarity..
In 2017, none of that existed. In 2021, most of it still didn't.
That's why those trying to bet on this technological shift in those past cycles often lost money cause the institutional inflows were prohibited from joining.
That's now changing. And it's changing fast.
The Clarity Act is working toward defining digital assets in a way that existing securities law can actually accommodate.
The GENIUS Act is tackling stablecoins, giving them a regulatory framework that lets institutions interact with them without guessing whether they're compliant.
The SEC's posture has shifted from "this is all securities fraud" to actually engaging with the question of how existing frameworks apply to tokenized assets.
The DTCC begins their tokenization service in a month's time!
Every piece of regulatory clarity that gets published is another institution that can go from "we're watching" to "we're building." Because institutions were never anti-crypto, they were anti-ambiguity. And the ambiguity is now being resolved.
But here's the thing; having road rules is only half the equation.
You also need the road itself to be built properly.
And that's where every previous attempt got killed next.
You can have the best traffic laws in the world, but if the road is a dirt track with no guardrails, no one's going to drive on it.
These issues are being solved, today.
Yesterday I talked about trust.
Today it was regulation.
And over the next few days I'll talk about the other two issues that have prohibited institutional inflows that are being unlocked in a month's time.
Everything this technology has needed to be resolved is finally being cleared.
That's why I'm calling this the $100 trillion trade.
For those who haven't signed up to my event at 5pm ET Thursday, I'm going to be outlining why these four elements are coming together to create what I think is the greatest opportunity I've seen in this space.
You can click here to register.
Cheers,
Louis Sykes
Senior Crypto Analyst, All Star Charts
