In today’s newsletter, Joshua Riezman, chief legal and strategy officer at GSR, takes us through the United States regulatory status, expected changes and their impact.
Then, Shea Brown from Windle Wealth answers questions about these changing investment models and how they could impact investors in Ask an Expert.
– Sarah Morton
U.S. Crypto Regulatory Outlook: From Intent to Implementation
Heading into 2026, the U.S. regulatory outlook for digital assets is more constructive than it has been in years. The challenge is no longer whether policymakers want to act, but whether they can execute. Engagement with Congress and the Executive Branch in late 2025 suggests the core elements of crypto market structure legislation are largely agreed upon on a bipartisan basis. What remains are political bottlenecks and unresolved edge issues: headline risk from Trump‑adjacent crypto ventures, delayed agency leadership confirmations and lingering disagreements around stablecoin rewards. These factors have slowed the translation of consensus into law, even as the direction of travel has become clearer.
At a high level, U.S. crypto regulation in 2026 should be judged against two straightforward objectives. First, creating safe, clearly defined lanes for crypto entrepreneurs to build in the United States without living under constant threat of retroactive enforcement. Second, bringing global trading activity back onshore and reversing the unusual reality that the majority of a major financial market operates outside U.S. borders.
Most of the policy debates that matter in 2026 — market structure, token classification and liquidity provision — ultimately map back to these two goals.
Market Structure and Ancillary Assets
One of the most encouraging developments is growing alignment around a more functional approach to crypto market structure. Under this view, assets that are not securities in the traditional sense should be treated as commodities once they trade in secondary markets, even if capital formation and fundraising remain appropriately within the SEC’s remit.
This reflects how markets actually function. The SEC has long overseen disclosures and conduct related to fundraising, while commodities regulators focus on trading, market integrity, and derivatives. Applying that same logic to digital assets provides a clearer and more intuitive framework than attempting to stretch securities law concepts across a token’s entire lifecycle.
Importantly, this approach does not imply deregulation. Where projects retain meaningful centralized control or continue to play an active managerial role, tailored disclosures remain appropriate. The challenge is ensuring those regimes are scaled to the realities of early-stage startups and do not impose IPO‑style compliance burdens on projects that lack the capital or organizational maturity to support them. Done correctly, this model provides issuers with clearer expectations while allowing non‑security tokens to trade in regulated markets designed for liquidity, price discovery, and surveillance, an essential condition for building compliant onshore venues and attracting institutional participation.
Competitiveness, Not Just Compliance
A second and increasingly important shift is the reframing of crypto regulation around U.S. competitiveness. Today, more than 80% of global crypto trading volume still occurs offshore, a dynamic almost unheard of in other major financial markets. Policymakers are increasingly recognizing that overly complex, prescriptive or ambiguous rules do not eliminate risk; they simply export activity, liquidity, and talent.
In 2026, competitiveness is likely to move to the center of the regulatory conversation. Effective regulation must protect customers, while also making the U.S. an attractive venue for capital formation and trading. That implies greater emphasis on technology‑neutral rules that regulate outcomes — fair markets, disclosure, and integrity — rather than dictating specific technical architectures. If the goal is to attract offshore volume back onshore, clarity and workability matter more than theoretical purity.
Two Important Issues
Two unresolved issues will ultimately determine whether the U.S. succeeds:
1) Token classification – Any functional “network token” or non‑security token framework must rely on objective, observable criteria tied to how a token functions and accrues value today. Focusing only on historical issuance mechanics risks recreating the same, enforcement‑driven uncertainty that has plagued the market for years. Credible classification requires that investors, secondary trading venues and advisors can assess tokens based on architecture, governance, economic rights and real‑world use.
2) Liquidity provision – Deep, resilient markets do not exist without professional liquidity providers willing to quote both sides, hold inventory and absorb volatility. Explicit exemptions or safe harbors for bona fide market-making activity would materially improve market quality. Absent this clarity, legal risk discourages onshore participation, leading to thinner books, wider spreads and greater volatility, an outcome that undermines the very goals of regulation.
Looking Ahead
2026 is shaping up to be a transition year for U.S. crypto regulation. Progress is likely to come through operationalizing ideas that are already broadly agreed upon. Even partial advances on market structure, token classification and liquidity treatment would represent meaningful steps forward. The signal is clear: the U.S. is moving slowly but decisively toward regulated, competitive, and institutionally accessible crypto markets. The remaining question is how quickly intent becomes implementation.
– Joshua Riezman, chief legal and strategy officer, GSR
Ask an Expert
Q. What is the issue with regulators only focusing on how the token was originally issued?
When a token is originally issued as a security, it is subject to regulations that follow traditional finance. But as a token evolves and moves into secondary markets, the primary use and how it is controlled often change. This more closely reflects how commodities are traded. But if the token is legally frozen as a security, the economic shift is ignored, and the regulation is mismatched to how the token operates.
This mismatch in regulatory oversight, creates legal uncertainty. When it no longer reflects the classification as a security but is regulated as one, this creates dead weight and functionality loss. This uncertainty creates murky rules and a shadow of potential legal threat. If, after evolution, growth, and adoption, the token now more closely follows the trading of commodities, it is valuable to shift the regulator. Looking backward at the issuance, rather than toward the functions of tomorrow, creates a lag for the consumer.
Q. Why are market makers moving offshore instead of operating in the US?
In the U.S. crypto market, market makers face ambiguous rules, which pose risks to them. They risk post-judgment outcomes rather than predetermined guidelines. Without the clear rules that proper regulation aims to provide, their functions could appear to regulators as market manipulation or price control.
Since there are no explicitly recognized crypto market makers, the threat of regulatory backlash lingers. With market makers unsure of what they’re legally allowed to do and the fear of regulatory pushback in the ever-changing landscape of crypto regulation, they expose themselves to a significant risk. The problem deepens when you consider that crypto asset classification is on shaky ground in the U.S.
With this inherent risk of operating in the U.S., rational market makers would choose to operate where certainty is provided.
Q. Why would clearer token classification be beneficial to investors and advisors who want to invest in crypto?
Uncertainty is inherently risky. Investors demand a risk premium when investing in an asset that carries added regulatory risk. The thought of delisting or token illiquidity adds to the risk of investment. The added risk perceived by an investor makes the asset more difficult to price.
With clearer token classification, the rules and regulations become clearer, helping an investor understand an asset’s volatility and eliminating unnecessary risk.
From the advisor’s standpoint, as a fiduciary, putting a client in an asset with an ambiguous classification could be perceived as too risky. While this puts the client at a disadvantage by not providing this exposure, it is reasonable to ask for a clear classification to be established. For an adviser constrained by “home office” compliance, an asset with a muddy classification may not be investable, again putting clients at a disadvantage.
From a broader view, a clearer asset classification would further take crypto from a speculative investment to an asset that is needed in portfolios. With this, professional liquidity would become less frugal and would add support.
– Shea Brown, first mate, Windle Wealth
Keep Reading
- The New York Stock Exchange plans to launch a blockchain-based platform later this year that will enable 24/7 trading of tokenized stocks and exchange-traded funds, pending regulatory approval.
- UBS CEO states that blockchain will play a ‘big role’ in reshaping traditional finance.
- White House crypto czar David Sacks says the U.S. banks will fully integrate with crypto once the Market Structure Bill passes.
