In today’s newsletter, Joshua Riezman, GSR’s Chief Legal and Strategy Officer, walks us through the U.S. regulatory status, expected changes, and their impact.
Next, Windle Wealth’s Shea Brown answers questions about these changing investment models and their potential impact on investors in Ask an Expert.
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Looking ahead to 2026, the U.S. regulatory outlook for digital assets is more constructive than it has been in years. The challenge is no longer whether policy makers want to act, but whether they can implement them. Engagement with Congress and the executive branch in late 2025 suggests that the fundamental elements of crypto market structure legislation are largely agreed upon on a bipartisan basis. What remains are political bottlenecks and unresolved fringe issues: the major risk of Trump-adjacent crypto ventures, late agency leadership confirmations, and ongoing disagreements around stablecoin rewards. These factors have slowed the translation of consensus into law, even as the direction forward has become clearer.
At a high level, US crypto regulation in 2026 must be judged against two simple goals. First, create secure, clearly defined pathways for crypto entrepreneurs to build in the United States without living under the constant threat of retroactive enforcement. Second, bring global business activity home and reverse the unusual reality that the majority of major financial markets operate outside U.S. borders.
Most of the important policy debates in 2026 – market structure, token classification, and liquidity provision – ultimately point back to these two goals.
Market Structure and Ancillary Assets
One of the most encouraging developments is the growing alignment around a more functional approach to crypto market structure. According to this view, assets that are not securities in the traditional sense should be treated as commodities once traded on secondary markets, even though capital formation and fundraising rightly remain within the purview of the SEC.
This reflects how markets actually work. The SEC has long overseen disclosures and conduct related to fundraising, while commodities regulators focus on trading, market integrity and derivatives. Applying this same logic to digital assets provides a clearer and more intuitive framework than attempting to extend securities law concepts to the entire lifecycle of a token.
It is important to note that this approach does not involve deregulation. Where projects retain significant centralized control or continue to play an active management role, tailored information remains appropriate. The challenge is to ensure that these regimes are tailored to the realities of early-stage startups and do not impose IPO-style compliance constraints on projects that do not have the capital or organizational maturity to support them. Implemented correctly, this model provides issuers with clearer expectations while allowing unsecured tokens to trade on regulated markets designed for liquidity, price discovery, and monitoring, an essential requirement for creating compliant onshore venues and attracting institutional participation.
Competitiveness, not just compliance
A second, increasingly important change is the reframing of crypto regulation around American competitiveness. Today, more than 80% of global cryptocurrency trading volume still takes place abroad, a dynamic almost unprecedented in other major financial markets. Policymakers increasingly recognize that rules that are overly complex, prescriptive, or ambiguous do not eliminate risk; they simply export activity, liquidity and talent.
In 2026, competitiveness will likely be placed at the center of the regulatory debate. Effective regulation must protect customers while making the United States an attractive place for capital formation and trade. This means placing more emphasis on technology-neutral rules that regulate outcomes – fair markets, disclosure and integrity – rather than imposing specific technical architectures. If the goal is to attract offshore volumes to the country, clarity and workability matter more than theoretical purity.
Two important questions
Two unresolved questions will ultimately determine America’s success:
1) Token ranking – Any functional “network token” or non-security token framework must be based on objective, observable criteria related to how a token functions and acquires value today. Focusing solely on historical issuance mechanisms risks recreating the same enforcement uncertainty that has plagued the market for years. Credible classification requires that investors, secondary trading platforms, and advisors can evaluate tokens based on their architecture, governance, economic rights, and real-world usage.
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 activities would significantly improve market quality. In the absence of this clarity, legal risk discourages local participation, leading to smaller portfolios, wider spreads and greater volatility, a result that undermines the very objectives of regulation.
Looking to the future
2026 is shaping up to be a transitional year for US crypto regulations. Progress will likely come through the implementation of ideas that are already widely accepted. Even partial advances in market structure, token classification, and liquidity treatment would represent significant advances. The signal is clear: the United States is slowly but decisively moving toward regulated, competitive, and institutionally accessible crypto markets. The remaining question is how quickly intention turns into implementation.
– Joshua Riezman, Chief Legal and Strategy Officer, GSR
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Q. What is wrong with regulators only focusing on how the token was originally issued?
When a token is initially issued as a security, it is subject to regulations that follow traditional finance. But as a token evolves and enters secondary markets, its primary use and how it is controlled often changes. This more closely reflects the way commodities are traded. But if the token is legally frozen as collateral, the economic change is ignored and the regulations do not match how the token works.
This inadequacy in regulatory oversight creates legal uncertainty. When it no longer reflects classification as a title but is regulated as such, this creates dead weight and loss of functionality. This uncertainty creates murky rules and the shadow of a potential legal threat. If, after evolution, growth and adoption, the token now follows commodity trading more closely, it is worth changing regulators. Looking back on the show, rather than towards the features of tomorrow, creates a disconnect for the consumer.
Q. Why do market makers move overseas instead of operating in the United States?
In the US 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 adequate 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 persists. As market makers remain unsure of what they are legally allowed to do and fear regulatory backsliding in the ever-changing crypto regulation landscape, they are putting themselves at significant risk. The problem gets worse when you consider that crypto asset classification is on shaky ground in the United States.
Given the inherent risk of trading in the United States, rational market makers would choose to operate where certainty is assured.
Q. Why would a clearer classification of tokens benefit 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 additional regulatory risk. The idea of delisting or token illiquidity adds to investment risk. The additional risk perceived by an investor makes the asset more difficult to value.
With a clearer classification of tokens, the rules and regulations become clearer, helping the investor understand the volatility of an asset and eliminate unnecessary risks.
From the advisor’s perspective, as a fiduciary, placing a client in an asset with an ambiguous classification could be perceived as too risky. Although this disadvantages the client by not providing this exposure, it is reasonable to request that a clear classification be established. For an advisor constrained by “home office” compliance, an asset with unclear classification may not be investable, again putting clients at a disadvantage.
From a broader perspective, clearer asset classification would move crypto from a speculative investment to a necessary asset in portfolios. Thus, professional liquidity would become less frugal and add support.
– Shea Brown, First Lieutenant, Windle Wealth
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