With recognition of bitcoin as an asset class, money managers will be able to hedge their clients investments or allocate their assets into a bitcoin ETF without worry about being sued if the value goes down. This is good news because it allows your average investor to buy bitcoin without having a wallet or setting up an account or ever even touching a crypto. Their financial advisors or custodians will do it for them.
Without this classification, money managers can’t own or invest bitcoin on behalf of their clients (in the USA, at least). They'd risk getting sued under US laws for investing their clients' money recklessly. Obviously, this prevents billions of dollars from entering the bitcoin marketplace.
Now, most money managers have contracts that state a third party will hold onto their assets as a custodian. This rule is in place to protect investors from potential fraud. So, they hire firms like Morgan Stanley or Goldman Sachs have “custody” of their investments. Presumably they'd have the same arrangement for holding bitcoin.
But there are no institutional-grade custodians for cryptocurrencies yet. They need that piece in place before they can put money to work in the actual bitcoin market. But once they do (maybe they already have, because it's a legal not operational issue), we could see a HUGE flood of money into bitcoin.