Why 2026 Could Redefine Crypto Market Structure

According to market participants, cryptocurrency markets will likely see liquidity concentrated in fewer locations in 2026, as new regulatory frameworks and institutional participation begin to shape how trading actually works.

Algorithmic trading and market-making firm Auros noted this in its 2025 Annual Reflections shared with Decrypt that while decentralized finance has continued to grow, maintaining this momentum will require a fundamental improvement in how liquidity works.

“Despite the turbulence, DeFi TVL continues its steady progression, but maintaining it will require a step change in on-chain efficiency in 2026,” the company said, calling for “deepening liquidity on major DeFi venues, tightening spreads, and improving execution quality.”

SB Seker, Head of APAC at Binance, shares the same sentiment, saying Decrypt that “innovation, regulation and market infrastructure are increasingly aligned, reshaping global market dynamics.”

The year will test whether markets can sustain institutional-grade execution standards and absorb volatility without the fragility exposed during the October crisis. liquidity crisiswhen more than $19 billion in leveraged positions were liquidated in about 24 hours and order book depth evaporated across major venues.

More importantly, it will reveal whether regulatory frameworks translate into operational improvements in how venues manage risk, maintain liquidity and prevent cascading failures that institutional treasuries cannot handle.

Regulations align

The European MiCA framework came into force in December 2024, with crypto companies required to obtain European licenses and meet higher standards on security, transparency and consumer protection by the end of transition periods which extend until mid-2026.

Asia’s regulatory scenario converges around similar themes, such as that of Hong Kong adopted its stablecoin licensing framework last August, with the first licenses expected in early 2026.

Meanwhile, Japan is moving towards reclassify major cryptos as financial products, with a flat rate tax of 20% from 2026.

“While 2025 was a pivotal year for establishing regulations on virtual assets, 2026 is when the proverbial rubber will hit the road,” said Musheer Ahmed, founder and managing director of Finstep Asia. Decrypt.

“Following the introduction of landmark legislation last year (Genius Act), we anticipate that the next phase of regulation will go beyond licensing and defining regulated activities,” Ahmed said.

The market will likely see “a divergence in activities”, Ahmed said, with a segment catering to “crypto purists who prefer purely decentralized models”, while international regulators will review these structures for potential frameworks beyond 2027.

For traditional finance to “confidently increase its size in digital assets,” he said, “robust governance and a well-defined market structure are paramount,” as well as clear rules to bridge the gap in areas such as tokenized securities.

American momentum

In the United States, the legislation governing the structure of the domestic crypto market continues to evolve towards a potential breakthrough.

The Senate Banking Committee has reportedly scheduled a markup for January 15, bringing the legislation closer to a floor vote, according to Crypto America. report.

The bill, which passed the House with bipartisan support last July, would establish the first comprehensive federal framework defining regulatory jurisdiction between the SEC and CFTC.

However, tensions remain with Senator Cory Booker, who previously said Decrypt He doesn’t trust the White House’s assurances about appointing Democrats to financial regulators, calling it a “deep concern.”

The question facing markets is whether infrastructure can evolve quickly enough to support the institutional demand that is now materializing in all countries. tokenized assets, stable coinsand flows linked to ETFs, without periodic fragility during stress events that institutional capital cannot tolerate.