Bitwise Chief Investment Officer Matt Hougan: Tokenization is a Super Trend
Bitwise Chief Investment Officer Matt Hougan stated that tokenization is a super trend. On the same day, the SEC provided a trading channel for tokenized stocks in the U.S., and S&P Global announced the acquisition of OpenZeppelin, leading to a rise in decentralized finance-related assets. He drew an analogy with Nvidia: when ChatGPT launched in November 2022, its stock price was about $16, which rose 176% to about $46 a year later, and is now around $219; the trend is longer than expected, and one should not stop just because they did not buy at the bottom.
The SEC issued a five-year "innovation exemption." Tokenized securities can be traded on a licensed automated market maker and liquidity pool without being defined as an exchange; institutions providing liquidity to the pool with their own funds are temporarily exempt from registering as dealers. Tokens must correspond to real equity, including dividends and voting rights, while synthetic exposure is excluded. The venue must notify the issuer and wait 30 days; if the issuer opposes, the exemption cannot be used for listing. Smart contracts must be auditable, public, and deployed on a public chain, with transactions having specified quantities and transaction limits, and details published in USD. Chairman Paul Atkins referred to this as bringing capital markets into the digital age within legal authority; two days prior, the Senate failed to advance the market structure bill with a procedural vote of 49 to 50.
S&P Global signed with OpenZeppelin, with the consideration undisclosed. Founded in 2015, this company provides an open-source contract library and auditing, claiming to have transferred value exceeding $37 trillion through contracts, completed over 900 security assessments, and discovered more than 10,000 vulnerabilities before launch. After the transaction, it will continue to operate independently under its original name, with founder Demian Brener remaining at the helm, reporting to the president of S&P Ratings. This week, S&P also led a $110 million investment in crypto market data provider Kaiko, aiming to extend ratings from issuer credit to on-chain code risk.
The exemption is not a blanket opening. The venue must be a U.S. entity, comply with sanctions lists, and synthetic stock tokens and products that only track prices are not included in the framework. Brokers that have already tokenized U.S. stocks overseas must restructure if their products only provide price exposure without shareholder rights to enter the U.S. channel. The market cap of tokenized U.S. stocks remains only in the tens of billions, with daily trading far smaller than the New York Stock Exchange, but this is the first time regulators have opened a licensed experimental slot for AMMs.
Hougan consolidated these three events into one investment conclusion: the rules, ratings, and safety standards of traditional finance are moving on-chain, a process measured in years. His focus for investment advisors has shifted from Bitcoin to stablecoins and tokenization; he believes the annual growth rate of stock tokenization could reach several times, with on-chain trading having the potential to amplify by another order of magnitude due to 24/7 availability and smart agents.
The market mechanism is the license premium after the rules are opened. Buyers are issuers of real equity tokens and on-chain venues that want to avoid being defined as exchanges; sellers must meet compliance stacks of licensing, issuer veto, and public auditing. Beneficiaries are platforms holding real equity tokenization licenses, contract auditors, and on-chain data providers; those under pressure are offshore products that only create synthetic tokens and cannot provide voting rights. Funds are shifting from gray cross-border shares to licensed liquidity pools within the five-year experimental window.
Source: Public information
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Hougan wrote that the super trend means "buying too early is not a mistake." He has witnessed similar curves in the ETF industry: once the rules open, funds flow in annually, not weekly. This time, the SEC does not have to wait for Congress and uses existing exemption powers to open a five-year window for licensed AMMs, effectively acknowledging the failure of the congressional bill while still trying to reclaim offshore tokenized transactions. S&P's acquisition of OpenZeppelin places "whether the code will lock up money" as a risk category alongside credit ratings. The coincidence of these three events on the same day is not accidental; it indicates that infrastructure providers are positioned in the first hour after the window opened.
The capital path involves rating companies purchasing auditing standards. S&P already has issuer ratings and Kaiko market data but lacks a contract library and vulnerability list; OpenZeppelin's open-source library is already positioned beneath the largest stablecoins and tokenized funds. Money is shifting from information service subscription fees to on-chain technology risk assessment fees. The exemption requires contracts to be publicly auditable, effectively writing the standards of the acquired company as entry conditions. Traditional exchanges still operate on a membership basis, while new venues price based on pools and algorithms, with clearing shifting from T+1 to on-chain finality.
The analogy must be drawn to the rejection of Bitcoin ETFs in 2014 and the approval of spot ETFs in 2024. The ten years in between were a battle over product forms and custody standards. This five-year exemption is similar to a "conditional pilot" and is not permanent legislation. The industry's position is shifting from offshore synthetic stocks to onshore real equity tokens; the stage is one of regulatory experimentation, not one where scale has already caught up with the NYSE. Permissionless protocols like Uniswap must transform into licensed venues to participate; otherwise, they will not access NMS stocks.
Structural judgments belong to the reconstruction of the industry chain. Reconstruction occurs at three levels: the definition of trading venues, market maker licenses, and code auditing: those who can simultaneously meet securities law, issuer veto rights, and open-source auditing will be able to move U.S. stocks into liquidity pools. The mechanism is that after the failure of congressional legislation, administrative regulation uses time-limited exemptions to lock innovation in a revocable cage, preventing offshore loss while not handing the national market system entirely to public chains.