Institutional transition: 2025 - 2026 How encryption policies reshape market structures
Summary
At the beginning of 2026, a message about the Fed's chairmanship could trigger an encrypted market swing, indicating that the encrypted assets were highly embedded in the macro-policy environment. Policy factors are shifting from background variables to core factors influencing market structures。
Looking back over the past decade, encryption regulation has gone through three stages: Early ambiguity and ex post facto enforcement followed by a definite period of direction but not yet set, until 2025, when the real phase of implementation began. Regulation no longer merely pursues risk, but intervenes proactively in the design of market structures, identifying who can participate, how to trust assets and who is responsible for liquidation。
Policies are no longer simply counterproductive or space-friendly. It is more like a financial order project, reshaping market structures through institutional arrangements。Stable currencyThe integration of balance sheet regulation logic is increasingly close to binding payments and financial intermediaries; exchanges and service providers are included in licensing and capital requirements systems; DeFi leverage and clearing structures are beginning to be put into a systemic risk perspective; and Asia has a licensed open path, with the US and Europe progressively clarifying borders through legislation and enforcement. The global regulatory logic is convergent: risks must be visible, responsibilities must be retroactive and failures must be liquidated。
In 2026, the policy focus moved further up. Moving from investor protection and price volatility to systemic issues such as liquidity structures, clearing mechanisms and cross-border financial channelling. Does stability affect the currency market? Could chain leverage spill over to traditional finance? Will cross-border payments and PayFi change the regulatory framework for foreign exchange and payments? These issues are becoming a new policy focus。
In this institutional environmentEncryption MarketThe logic of competition is changing. High-leveraging, blurred accountability and non-transparent reserve structures will become increasingly difficult to sustain; reserves will be clear, risk-segregated and the design of clear clearance paths will be more permanent. Innovation will not disappear, but will shift from disorderly expansion to carrying expansion。
Understanding policy evolution is not just a macrojudgment, but a prerequisite for understanding future market structures. Encryption forms are being institutionalized. Those who find a balance between transparency and efficiency are more likely to cross the next cycle。
Contents
Policy is not a good or a good, but a “financial order project”
1.1 Research background: 2025 - 2026 is the true watershed of encryption policy
1.2 Why regulation as a "price variable" gradually lapsed in 2025
1.3 The encryption policy is moving from “attitude expression” to “system implementation”
Time-axis: Policy evolution from the “mixed period” to the “implementation period”
2.1 2018 - 2022: Regulatory fuzzy periods, "wildness" in the encrypted market
2.2 23 - 2024: Policy alignment period with clear direction but not yet landed
2.3 2025: The year in which the rules are actually implemented
3.2025 Core change: not legislation, but changes in regulatory logic
3.1 United States: From “enforcement regulation” to “systemal redistribution”
3.2 EU MiCA: Real landing effect in 2025
3.3 The Asian path: licensing, not liberal regulation
3.4 Summary: Regulatory Logic Consensus 2025
4.2026 Policy focus forward: moving from price risk to systemic risk
4.1 Stabilizing the focus of monetary regulation or moving towards a macro-financial framework
4.2 Chain leverage and liquidation risk: Is DeFi system secure
4.3 PayFi and cross-border payments: regulatory focus on chain payment paths
4.4 Key words for 2026: non-price risk, systemic importance, cross-market transmission
5. How policies reshape encrypted market structures
5.1 Changes in product patterns: from highly leveraged game to risk segregation design
5.2 Changes in financial pathways: from anonymous to identifiable mobility
5.3 Change in risk structure: Who bears the tail risk
Looking ahead and trends: from “compliance adaptation” to “structural options”
6.1 Compliance is no longer a cost item but market access Rights
6.2 markets will move towards a “two-track system”: a compliance finance layer vs chain innovation layer
6.3 Stable currency will be a central entry point for the “new financial infrastructure”
6.4 Regulation moves from “rule-making” to “data-driven”
6.5 Pattern evolution: from “open competition” to “structural concentration”
6.6 DeFi compliance path: from “agreement neutrality” to “interface compliance”
6.7 Track heavy pricing: from “flow competition” to “structure competition”
7. Conclusion: a new stage in the encryption market in an institutional environment
References
Policy is not a good or a good, but a “financial order project”
In early February 2026, there was a rapid decline in the encryption market, triggered by a macro-policy signal that Trump nominated Kevin Warsh, a former Fed member on X, as the next Fed Chairman. After the news was released, the market quickly re-pricing the future monetary policy expected that the dollar would grow stronger and risk assets would be under overall pressure, with a clear chain reaction in the encrypted market. This event has shown us that the Web3 market has entered a highly policy-sensitive and instant feedbackable phase. Unlike in the past, which was largely driven by its own cycles and narratives, at the beginning of 2026, a mere undetermined policy signal was sufficient to move rapidly to encrypted asset prices through risk preferences, leverage adjustments and financial flows. Policy changes between 2025 and 2026 are no longer just market context conditions, but are becoming the core variables influencing market structures. Researching the historical logic of policy and its future direction is no longer a complement to macrojudgment, but a necessary prerequisite for understanding how the encrypted market operates and how it evolves over time。
1.1 Research background: 2025 - 2026 is the true watershed of encryption policy
LOOKING BACK AT THE EVOLUTION OF ENCRYPTION POLICY OVER THE PAST DECADE, A CLEAR FAULT IS FOUND: REGULATION FROM 2018 TO 2022, MORE AFTER THE MARKET. THE MAIN TASK OF REGULATORS IS TO REMEDY AND ENFORCE AFTER RISKS HAVE BEEN EXPOSED. THE RESPONSE TO THE PROBLEM OF ICO FOAMS, EXCHANGE THUNDERSTORMS, THE LOSS OF ANCHORS OF STABLE CURRENCIES AND THE COLLAPSE OF ALGORITHM MODELS IS GENERALLY CHARACTERIZED BY A CLEAR EX POST FACTO RESPONSE。
In 2025, however, it was not the passage of a heavy-weight bill, nor the sudden shift in regulatory attitudes to friendly or tough, but rather the shift of regulation to pre-design after the initiation of post-reaction responses. The focus of policy discussions has changed in substance: instead of focusing only on which behaviours are infractions, it has moved ahead into the market structure itself, redefining which operations can exist, which structures should exist, and who is responsible for liquidation, bottoming and risk segregation. At this stage, there is a growing consensus in several jurisdictions that the encryption market is no longer a remote test site that can be left out of the system for a long time, but must be integrated into a structured market that is governed by the established financial order。
In 2026, the change became more visible. The focus of the discussion was no longer on whether to regulate, but on how to regulate, to what level, and who was responsible. Regulation has begun to be reflected in specific and enforceable institutional arrangements, including access standards, compliance borders, risk containment mechanisms and cross-market harmonization rules. It is in this sense that 2025-2026 constitutes a real watershed in encryption policy: for the first time, regulation is no longer merely restricting markets, but is beginning to reshape their own operating structures。
1.2 Why regulation as a "price variable" gradually lapsed in 2025
For a long time now, market habits have understood policy implications in a highly simplified way: bills are passed for good, approvals are delayed for good, and space is left open; tight regulation means watching, and friendly policy statements mean seeing more. This logic was not entirely ineffective at an early stage, as the main impact of the policy at the time was indeed concentrated on the expectation and emotional dimensions. However, with the change in regulatory logic, this understanding began to significantly fail in 2025. At the heart of policy concerns is no longer the price itself but the structural risk behind it. From a regulatory point of view, what is really at stake is not how much a given currency goes up or down, but whether the risk spills over to the traditional financial system, how leverage is created and channelled and, in extreme cases, who should take the responsibility for liquidation。
The way in which policies affect markets is changing: rather than acting directly in terms of prices, they are shaping market structures in the long term through institutional design. Regulation does not tell the market where to go, but it identifies which businesses can gain compliance liquidity, which models will be systematically compressed and which participants will have long-term living space. In this framework, the judgement that “a bill is a good thing” is too crude. Some of the policies may have suppressed dynamism in the short term, but have increased the security and certainty of financial access in the medium to long term; conversely, some seemingly liberal statements, in the absence of enforcement mechanisms, tend to make a real difference in the way markets operate. Thus, since 2025, policy has ceased to be a simple price variable and has become a key determinant of the direction of market structure。
1.3 The encryption policy is moving from “attitude expression” to “system implementation”
To sum up in one sentence the policy changes between 2025 and 2026 are: encryption regulation is moving from uncertainty to structural constraints. Early market uncertainty was largely the result of concerns about whether “one size fits all” and between 2025 and 2026 it was being replaced by a clearer but also more binding system of rules. Regulation does not commit to market growth, but it identifies which behaviours are no longer tolerated and which paths are subject to long-term compliance. At the same time, the focus of regulation shifted from attitude expression to institutional enforcement. The policy has evolved into operational rules, including licensing systems, information disclosure requirements and liquidation and fiduciary responsibilities. Compliance is no longer merely a narrative label, but begins to translate into real operational costs and competitive thresholds。
In this process, there has also been a shift in the way in which policies affect markets: rather than being largely characterized by short-term fluctuations, institutional arrangements have continued to shape financial structures, product patterns and actors. Such changes tend to be slow but highly irreversible. Based on this judgement, the follow-up to this paper will no longer revolve around “goods or space” of a single policy, but rather try to answer a more central question: Under the new policy framework, the encryption market would be restructured and who would benefit from or be eliminated from the process。
Time-axis: Policy evolution from the “mixed period” to the “implementation period”
When we look at the length of time, we see that the encryption policy is not random, but is evolving along a clear path, moving from ambiguity to enforceability, from attitude expression to institutional arrangements。
2.1 2018 - 2022: Regulatory fuzzy periods, "wildness" in the encrypted market
From 2018 to 2022, it was a typical regulatory ambiguity in the encryption market. The central feature of this phase is that regulation has not yet developed a unified logic that can be expected, understood and internalized by the market. At the policy level, most of the rules at the time remained qualitative: whether digital assets belonged to securities, commodities or payment instruments, and the answers given by different institutions and jurisdictions were inconsistent. Law enforcement is characterized by significant fragmentation, often after the risk has become apparent, rather than by the establishment of clear borders. The encryption market has evolved into a highly self-enhanced structure. Between 2018 and 2022, the core innovation of the market was almost entirely centred on efficiency and expansion: DeFi lending and decentrized exchanges developed rapidly, with the emergence of algorithms for currency stabilization, cross-arrangement gains, unlicensed derivatives and highly leveraged products. Projects and platforms generally place growth rates ahead of compliance design。
In the process, leverage is continually superimposed without clear lines of liquidation and responsibility. Stable currencies, in the absence of transparent reserves and auditing constraints, de facto assume the role of a clearing and liquidity hub within the system, while the revenue structure, which is formed through a combination of liquid mining and cross-agreements, leaves a significant amount of risk within the system, without a corresponding isolation or detached mechanism. Many of the models that were then seen as innovative were essentially radical reorganizations of traditional financial logic in spaces where regulation had not yet been involved in structural design. This phase is typical of “innovation ahead, rule behind”. When access thresholds, attribution of responsibility and risk boundaries are not clear, markets naturally evolve along the lowest-cost, fastest-expanding paths and create structural ambushes for subsequent regulatory interventions. The years 2018 to 2022 were not regulatory failures, but regulation had not really entered the structural design phase。
2.2 23 - 2024: Policy alignment period with clear direction but not yet landed
Between 2023 and 2024, the encryption policy was scheduled. The regulatory direction of the major jurisdictions has begun to converge, but an enforceable and stable institutional framework has not yet been fully established. While regulation has begun to clarify what is unacceptable, it still does not provide a complete set of long-term operating rules。
United States: clear enforcement, legislative lag
In the United States, this phase is particularly marked. Regulators continue to send signals to the market through high-frequency enforcement operations, reject parts of the business model and redraw compliance borders. At the same time, however, uniform and clear federal legislation remains absent, and markets are able to sense regulatory attitudes, while it is difficult to accurately assess long-term compliance paths. This signal was reinforced by a number of landmark cases. In 2023, Sam Bankman-Fried, founder of the FTX, was found guilty of fraud and conspiracy and clearly conveyed the regulatory position that the core duty bearers must bear the legal consequences. Celsius Network, the founder of the encrypted lending platform that went bankrupt in 2022, Alex Mashinsky, was indicted in 2023 and sentenced in 2024 and 2025, further reinforcing the expectations of accountability for high-income commitments and misuse of client funds. At the same time, the development of the Tornado Cash privacy agreement was charged with a criminal offence in 2023, which led to extensive discussions within the industry about the boundaries of responsibility for decentrization tools. Although several legislative proposals were advanced by the National Assembly during the same period, by 2024 there was still no uniform and enforceable regulatory system. This state of affairs has allowed the market to constantly explore red lines in practice, creating a pattern of fixed direction and undefined rules。
EU and Asia: clearer path
By contrast, the EU has completed a more systematic institutional design at this stage. The introduction of the MiCA, for the first time in a complete framework, defines the distribution of encrypted assets, services and market boundaries, specifying that they will be incorporated into the established financial regulatory system. Some Asian financial centres have chosen a more strategic path. Through licensing systems and clear compliance frameworks, some operations are allowed to operate within regulatory horizons, subject to clear risk boundaries. Hong Kong has started issuing licences to virtual asset trading platforms, such as HashKey Group and OSL, the first approved local exchange. Singapore has raised the threshold of access through a tiered licensing system. This “licensed opening” provides a more predictable path to development for the market and creates a realistic sample of institutional engagement and compliance innovation. The tone of this stage is not the same as the rule has landed. It's more like regulating a collective signal to the market: The encrypted market will no longer be in the grey zone for long, and the core of future competition will no longer be technology and flows, but compliance and structural design。
2.3 2025: The year in which the rules are actually implemented
If the previous phase dealt with “where to go”, from 2025 on, the regulatory response began to be systematic. The change during the year did not come from a single act that shook the market, but was reflected in the fact that the rules were being implemented. The focus of regulatory attention falls on three most fundamental but long-standing issues: who is entitled to issue and deliver services, where funds should be held in trust, and who bears responsibility in the event of problems. In the European Union, MiCA entered the substantive implementation phase in 2025, and stabilizers and encryption service providers began to undergo continuous supervision under a unified framework. In Asia, the issuance of qualifications, hosting arrangements and allocation of responsibilities has been further refined, and the stabilization currency has gradually shifted from a “market consensus tool” to regulated payment and settlement components. In the United States, even if legislation is still not fully developed, the hosting, clearing and disclosure requirements around the spot bitcoin ETF have in fact established a model for the operation of compliance funds to enter the encrypted market. Regulation began to gradually reshape the functioning of the market through the implementation of basic rules. Compliance moves from attitude to sustainability. Part of the model is not directly prohibited, but is automatically defecated by liability and cost constraints. In 2025, it became the key node of the encryption market from “extensible structures” to “enable structures”. The rules began to land, and for the first time the market was forced to confront a real problem: Who can stay in a system of accountability。
3.2025Core year change: not bills, but changes in regulatory logic
The changes in 2025 are not necessarily marked by the adoption of a certain bill, but are more reflected in the fundamental shift in thinking about regulation narratives, power structures and institutional design。
3.1 United States: From “enforcement regulation” to “systemal redistribution”
OVER THE PAST FEW YEARS, THE UNITED STATES HAS BEEN HEAVILY DEPENDENT ON LAW ENFORCEMENT FOR ITS GOVERNANCE OF THE ENCRYPTION INDUSTRY. THE SEC HAS INCORPORATED A LARGE NUMBER OF ITEMS INTO THE SECURITIES REGULATORY FRAMEWORK BY MEANS OF AN “INTERPRETATIVE” APPROACH; THE CTC HAS LIMITED INVOLVEMENT IN DERIVATIVES AND FUTURES MARKETS. ON THE FACE OF IT, IT IS A REGULATORY HARDENING BUT, IN ESSENCE, A STOPGAP MEASURE IN THE ABSENCE OF A SYSTEM. BY 2025, THE PROBLEM COULD NOT CONTINUE TO BE SOLVED BY LAW ENFORCEMENT: ON THE ONE HAND, THE LAW ENFORCEMENT BORDERS WERE BECOMING INCREASINGLY BLURRED AND THE PRESSURE ON THE JUDICIAL SYSTEM CONTINUED TO RISE; ON THE OTHER HAND, INSTITUTIONS, BANKS AND PAYMENT SYSTEMS BEGAN TO ENTER THE ENCRYPTION FIELD IN A SUBSTANTIVE WAY, AND THE ORIGINAL TREATMENT MODEL COULD NOT SUPPORT LARGE-SCALE FINANCIAL ACTIVITY. U.S. REGULATION BEGAN TO MOVE FROM “WHO VIOLATES AND PUNISHES WHOM” TO A LOWER QUESTION: WHO HAS THE RIGHT TO REGULATE WHAT? WHAT IS THE REGULATORY BASIS? WHICH SYSTEM CONTAINERS SHOULD BE PLACED FOR ENCRYPTED ASSETS OF DIFFERENT FINANCIAL ATTRIBUTES
THE TRUE MEANING OF THE CLARITY BILL: NOT PASSING OR NOT, BUT DELIMITATION LOGIC
The CLARITY Bill, known as Digital Assembly Market Clarity Act of 2025, is a systematic legislative attempt by the United States Congress to restructure the digital asset market in the context of long-term regulatory uncertainty. The bill was introduced in the House of Representatives on 29 May 2025 and passed through the House of Representatives in July of the same year with a two-party majority, making it the first fully encrypted market structure bill to be passed in a single chamber of Parliament. As of April 2026, the CARITY bill was still pending in the Senate and was in the process of being put on hold and repeated: on the one hand, the Senate had not yet set a new timetable for its deliberations and the legislative process had been delayed many times; on the other, there were still considerable differences on key issues such as the stabilization of currency gains, the scope of DeFi regulation and conflicts of interest between banking and encryption, which made it difficult for the bill to enter the final voting process. Nevertheless, the bill is considered to be a blueprint for the core framework for digital asset regulation in the United States and has sustained policy attention (including public calls by Treasury officials for legislation to be advanced). However, in the context of the approaching mid-2026 elections, there remains considerable uncertainty as to whether it will finally land within the current parliamentary cycle。
FROM THE POINT OF VIEW OF SUBSTANCE, CLARITY IS NOT A SINGLE ISSUE-SPECIFIC BILL, BUT A “MARKET STRUCTURE BILL”, THE CORE OF WHICH IS NOT TO ENCOURAGE OR RESTRICT CERTAIN TYPES OF ENCRYPTION, BUT TO ANSWER A MORE FUNDAMENTAL QUESTION: HOW SHOULD THE DIGITAL ASSET MARKET BE INTEGRATED INTO THE EXISTING FINANCIAL REGULATORY SYSTEM? WITH THIS OBJECTIVE IN MIND, THE CORE ELEMENTS OF THE CLARITY BILL CAN BE SUMMARIZED IN FOUR AREAS。
FIRST, TO CLARIFY THE LEGAL CLASSIFICATION FRAMEWORK FOR DIGITAL ASSETS. FOR THE FIRST TIME, CLARITY DISTINGUISHED BETWEEN DIFFERENT TYPES OF DIGITAL ASSETS AT THE LEGISLATIVE LEVEL, FOCUSING ON THE DISTINCTION BETWEEN “INVESTMENT-TYPE DIGITAL ASSETS” AND “MATURE DIGITAL GOODS”. SOME OF THE TOKENS MAY BE IDENTIFIED AS SECURITIES AT AN EARLY STAGE OF FINANCING, CENTRALIZED CONTROL; HOWEVER, THEIR LEGAL ATTRIBUTES MAY CHANGE WHEN NETWORK OPERATIONS ARE NO LONGER DEPENDENT ON A SINGLE SUBJECT, AND THE TOKENS ARE MAINLY USED FOR NETWORK FUNCTIONS OR TRANSACTION SETTLEMENT. SECOND, THE INTRODUCTION OF “DYNAMIC REGULATORY ATTRIBUTION” MECHANISMS. UNLIKE IN THE PAST, THE ENFORCEMENT LOGIC OF LIFE-LONG CHARACTERIZATIONS, CLARITY ALLOWS DIGITAL ASSETS TO BE TRANSFERRED FROM THE SEC ' S SECURITIES REGULATORY SYSTEM TO A COMMODITY OR DIGITAL COMMODITY SYSTEM REGULATED BY CFTC, AFTER MEETING CERTAIN CONDITIONS. THIS DESIGN ESSENTIALLY RECOGNIZES THE LEGAL SIGNIFICANCE OF THE DECENTRIZATION PROCESS ITSELF。
THIRD, IDENTIFY THE BOUNDARIES OF POWER BETWEEN SEC AND CFTC. CLARITY SETS THE REGULATORY DIVISION OF LABOUR THROUGH LEGISLATION: SEC IS PRIMARILY RESPONSIBLE FOR DIGITAL SECURITIES-TYPE ASSETS RELATED TO FINANCING, ISSUANCE AND INVESTMENT RETURNS; AND CFTC IS RESPONSIBLE FOR DE-CENTRE-BASED DIGITAL GOODS AND THEIR DERIVATIVES. THIS ARRANGEMENT SEEKS TO PUT AN END TO THE LONG-STANDING UNCERTAINTY OVER JURISDICTION THROUGH LAW ENFORCEMENT. FINALLY, COMPLIANCE RESPONSIBILITIES OF MARKET PARTICIPANTS ARE DEFINED IN LAYERS. THE BILL DOES NOT SIMPLY PLACE ALL RESPONSIBILITIES ON THE PROJECT PARTY, BUT IMPOSES DIFFERENTIATED OBLIGATIONS ON DIFFERENT ACTORS, SUCH AS THE PROJECT PARTY, THE TRADING PLATFORM, THE BROKER, THE TRUSTEE, ETC., INCLUDING DISCLOSURE OF INFORMATION, REGISTRATION REQUIREMENTS, SEGREGATION OF USER ASSETS AND RISK MANAGEMENT RESPONSIBILITIES。
ON THE BASIS OF THE DESIGN OF SUCH A SYSTEM, THE ANALYTICAL SIGNIFICANCE OF THE CLARITY ACT WAS DEVELOPED. BETWEEN 2021 AND 2024, THE UNITED STATES DID NOT HAVE A STRUCTURED LEGISLATIVE FRAMEWORK FOR ENCRYPTED ASSETS, AND REGULATION RELIED PRIMARILY ON THE SEC TO DEFINE THE RULES AND BOUNDARIES THROUGH ENFORCEMENT ACTIONS. A LARGE NUMBER OF PROJECTS, TRADING PLATFORMS AND INFRASTRUCTURE INSTITUTIONS, OFTEN AFTER PROSECUTION OR INVESTIGATION, ARE INFORMED WHETHER THEY ARE CONSIDERED SECURITIES, BROKERS OR ILLICIT EXCHANGES. SUCH DISCRETIONARY EX POST REGULATION HAS GRADUALLY LED TO A CONVERGENCE OF GRIEVANCES AMONG INDUSTRY, THE JUDICIARY AND SOME LEGISLATORS. IN THIS REALITY, CLARITY WAS PRESENTED. ITS CORE OBJECTIVE IS NOT TO DEREGULATE REGULATION, BUT TO REPLACE ENFORCEMENT BY SYSTEMS AND RULES BY UNCERTAINTY. THUS, THE TRUE MEANING OF CLARITY IS NOT WHETHER IT WAS FORMALLY ADOPTED AT A GIVEN POINT IN TIME, BUT RATHER THAT IT FIRST ATTEMPTED TO REMOVE THE LOGIC OF DELIMITATION OF GOODS AND SECURITIES FROM CASE LAW ENFORCEMENT TO THE INSTITUTIONAL FRAMEWORK THAT COULD BE EXPECTED BY THE MARKET。
ONCE THIS DELIMITATION LOGIC IS INSTITUTIONALIZED, ITS EFFECTS WILL BE STRUCTURAL: THE SEC AND CFTC WILL NO LONGER COMPETE FOR REGULATORY POWERS IN CASES, BUT RATHER WILL GAIN A CLEAR DIVISION OF LABOUR THROUGH LEGISLATION. PROJECT PARTIES CANNOT RELY ON REGULATORY AMBIGUITY FOR LONG PERIODS OF TIME AND MUST IDENTIFY THEIR OWN COMPLIANCE PATHS AT THE DESIGN STAGE. TRADING PLATFORMS AND INFRASTRUCTURE INSTITUTIONS WILL ALSO BE FORCED TO MAKE CLEAR CHOICES ABOUT THE TYPE OF LICENCE, OPERATIONAL BOUNDARIES AND RISK SEGREGATION. THUS, CLARITY IS NOT A SIMPLE ENCRYPTED FRIENDLY ACT, BUT AN EXPERIMENT OF REDISTRIBUTION OF MARKET STRUCTURES AND REGULATORY POWERS THAT THE UNITED STATES REGULATORY SYSTEM SEEKS TO COMPLETE. IT MARKS A SHIFT FROM A HIGHLY DISCRETIONARY PHASE OF LAW ENFORCEMENT TO A STRUCTURED AND PREDICTABLE INSTITUTIONAL GOVERNANCE LOGIC。
Stable currency legislation: a currency with a balance sheet at its core
In 2025, the stabilization currency became the fastest and most consensual legislative direction for US encryption regulation, compared to the contest for token attributes. This change stems from a high degree of uniformity in regulatory judgement on the nature of the currency: the currency is not a question of technological innovation but of standard financial intermediation and payment instruments. At the legislative level, this consensus is reflected in a series of bills around the currency of stability, the most representative of which are the GENIUS Act (Guiding and Establishing National Participation for U.S. Stablecoins Act) and the draft regulatory framework for the currency of stability that has been discussed several times before. These bills, while still divided on specific provisions, are highly consistent in their core directions。
In terms of overall design, United States stabilization currency legislation treats stability currency as a redeemable financial instrument that is based on dollar assets and issued to the public. Thus, legislative attention is focused on issues, balance sheets, payment capacity and systemic risks. In particular, they focus on four core issues, which also constitute the true core of the logic of the regulation of stable currencies。
FIRST, WHAT ARE RESERVE ASSETS AND HOW ARE THEY HELD. LEGISLATION SUCH AS GENIUS CLEARLY EMPHASIZES THAT A COMPLIANCE STABILIZATION CURRENCY MUST BE BASED ON HIGH LIQUIDITY, LOW-RISK ASSETS, USUALLY LIMITED TO CASH, SHORT-TERM NATIONAL DEBT OR EQUIVALENT CASH ASSETS. AT THE SAME TIME, RESERVE ASSETS NEED TO BE STRICTLY SEGREGATED FROM THE ISSUER ' S OWN ASSETS AND HELD BY COMPLIANCE CUSTODIANS. THE CENTRAL PURPOSE OF THIS DESIGN IS TO ENSURE THAT THE ISSUER HAS REAL AND ENFORCEABLE PAYMENT CAPACITY IN EXTREME CASES。
Second, the attribution of proceeds from reserve assets. This is the most sensitive and controversial part of the stable currency business model. As the size of the stable currency expands, the interest earnings from its reserve assets will become extremely significant. The focus of the legislative discussion was on whether those proceeds constituted the use of public funds. Are there class deposits, class financial attributes? Are they bound by similar banking or money market funds? This question directly determines whether the issuer is more like a technology company or a financial institution。
Thirdly, is the currency of stability considered a payment tool and payment infrastructure? A number of bills explicitly include stabilization currency in the framework of payments regulation discussions. Once a stable currency is widely used for payments on or below the chain, cross-border settlements and commercial liquidation, its regulatory focus is no longer on asset issuance but on payment security, money-laundering, system stability and business continuity. This means that the issuer of a stable currency will have to assume compliance responsibilities that are close to payment agencies and even systemic financial infrastructure。
Fourthly, who is the person who redeemed the responsibility and the final risk. In times of sharp market volatility or crisis of confidence, the question of whether the currency of stability can be redeemed in full and at any time is a matter of utmost concern for regulation. The bill generally calls for clear mechanisms of foreclosure, time window and attribution of legal liability, and discusses the need to introduce higher levels of regulation to prevent stable currency from becoming a source of systemic risk in extreme cases。
Combining the above four points, a trend can be seen: the regulatory logic of a stable currency has moved away from the technical context of encrypted assets to a balance sheet and risk management framework in traditional financial regulation. Starting in 2025, the stable currency has been designed in such a way as to bring it closer to the traditional financial patterns of narrow banks (Narrow Bank) with high-quality assets, monetary market funds with high liquidity and strict investment restrictions, or highly restrictive payment-type financial institutions. This also means that currency stabilization is seen as a form of financial institution, not as a mere technical product. This change not only recasts the very survival logic of the stabilization currency project, but also profoundly affects the underlying structure of the entire encrypted market, as almost all the DeFi agreements, exchange liquidity, clearing mechanisms and cross-border financial flows are ultimately based on the financial intermediation of the stabilization currency。
3.2 EU MiCA: Real landing effect in 2025
If the United States is still in the form of a system in 2025, but not fully on the ground, the European Union’s MiCA (Markets in Cripto-Assets Regulation) is the first large-scale encryption regulatory framework to truly enter full implementation. In time, MiCA is not a new system that emerged in 2025, but it was in 2024-2025 that its core provisions began to impose substantial constraints on the market. Thus, the value of MiCA no longer lies in the size of the rules, but can be specifically tested: which provisions have really changed market behaviour? Which parts of the market are bypassed? Where is the regulatory border exposed
Which provisions were actually implemented
In practical terms, it is not the grandest principle to be discussed, but rather the most easily handled by regulators and closest to traditional financial regulation experiences. The first is access and licensing requirements for exchanges and service providers. MiCA has established clear standards for the registration and operation of encrypted asset service providers (CASPs), including capital requirements, internal controls, customer asset segregation, information disclosure and management responsibilities. This component was most clearly implemented in 2025, and the large centralized exchange could hardly avoid compliance registration or lose the EU market directly. The second is the restraint on the issuance of reference coins for stable currencies and assets. MiCA imposes a clear reserve requirement on the issuer of the stable currency, an obligation to disclose information and, in extreme cases, a duty to redeem. In particular, in situations where transactions are excessive and may pose systemic risks, issuers may face limitations in the scale of issuance. This provision created a substantial threshold for the Eurozone Currency Stability Project in 2025 and indirectly limited the way in which part of the dollar would expand in the EU market. Thirdly, there is enhanced enforcement of obligations relating to anti-money-laundering and control of transactions. The deep binding of the MiCA with the old EU AML/CFT framework has brought encryption service providers closer to compliance standards of traditional financial institutions in terms of customer identification, transaction monitoring, cross-border transfer records. This change directly raised compliance costs and accelerated the clearance of small and medium-sized trading platforms. As a result, the clearest message of MiCA in 2025 is that as long as you are the central subject of public service delivery, you cannot remain outside of the regulatory system。
Which provisions are “compulsory arbitrage” in the market
But MiCA is not a completely porous regulatory network. On the contrary, as they land, the market quickly finds a number of operational spaces that are legitimate but not entirely in line with the original purpose of regulation. The most typical is the question of the definitional boundaries of the subject of regulation. MiCA is primarily aimed at issuers and service providers, while its binding effect on projects that do not have a clear legal personality, a front-end separation from an agreement, or decentralized governance is significantly diminished. This has led to some projects being structurally designed to proactively weaken their role as service providers in order to circumvent the MiCA. There is also some room for separation of geographical and operational structures. Some agencies formally meet the requirements of the MiCA by placing core technology, liquidity or governance structures outside the EU, while retaining limited functionality or compliance companies only in the EU, but still maintain high operational flexibility in substance. This practice is not illegal, but it clearly weakens the actual binding force of MiCA on global operations. The third is the blurry space between DeFi and non-hosting services. MiCA does not provide a systematic regulatory framework for DeFi, but rather a relatively restrained attitude. The real effect in 2025 was a significant increase in the cost of compliance for the centralized platform, while the decentrization agreement gained relative institutional advantage in the short term, creating some kind of reverse incentive for compliance. These phenomena do not mean that the MiCA failed, but rather reveal a reality: Inevitably, arbitrage space exists in the face of highly modular, reversible encrypted markets for any system centred on subject regulation。
MiCA's true constraints on the exchange, the issuer and DeFi
From a market structure point of view, MiCA in 2025 brought about not an overall tightening, but rather an asymmetrical effect. For the Centralized Exchange, MiCA actually increased the concentration of industries. The increased cost of compliance and the harmonization of licences across borders have made it easier for large exchanges to bear institutional pressure, while the space for small and medium platforms has been significantly reduced. As a result, the market in the EU has become more concentrated in terms of transaction liquidity, but innovation flexibility has declined. For the issuer of tokens and stable currencies, MiCA reinforces the concept of the subject of responsibility. The need for project parties to assume clear responsibilities for information disclosure, market behaviour and risk management has somewhat inhibited high-risk and low-transparent distribution patterns, but has also raised the entry threshold for compliance projects. For DeFi, the impact of MiCA in 2025 was more like a regulatory pressure that delayed entry into force. In the short term, DeFi benefits relatively from the difficulty of being directly integrated into the regulatory framework; in the long run, however, its institutional space is being narrowed as front-end, interface, governance actors are gradually incorporated into the regulatory landscape. MiCA’s central signal in 2025 is not that the EU is going to be strictly encrypted, but that, as long as you play a clear role in the financial system, you will have to be regulated at the appropriate level; but the system itself, too, continues to compete with the market。
3.3 The Asian path: licensing, not liberal regulation
Around 2025, when the United States and Europe retweeted around how to legislate and delimit, some Asian financial centres had moved out of a very different path. The regulatory model, represented by Hong Kong and Singapore, is not simply a liberalization of the encryption industry, but a permissible open-door strategy with first-hand controls and last-resort audits. This path appears to be more friendly on its face, while it actually imposes higher and more specific requirements on market structures。
Singapore: Functional regulation centred on the Payment Services Act
The encryption regulation in Singapore is based on the Payment Services Act, PSA, which is at the heart of the system and which functions and regulates encryption activities. Within the PSA framework, money stabilization, encrypted transactions, hosting and transfers are integrated into the DPT service. As long as institutions provide relevant services to the public, they must obtain licences and meet capital, anti-money laundering, risk management and technical security requirements on an ongoing basis. Key to this design is that encryption activities are directly considered as financial services. Regulatory concerns are not about the technical attributes of the token itself, but rather about whether public funds are involved, whether payment or liquidation functions are assumed, whether systemic risks can be created, etc. Between 2024 and 2025, Singapore further strengthened restrictions on retail investor protection, leverage trading, and revenue-based products through regulatory guidance, making encryption more institutionally close to traditional payments and financial intermediaries. The long-term impact of this model is that encryption agencies have easier access to clear compliance routes in Singapore, but at the same time must be subject to continuous and binding regulatory review. Market structures are thus characterized by a high degree of institutionalization, low leverage and low tolerance, and are better oriented towards institutions and cross-border operations than to high-risk speculative markets。
Hong Kong: centred on virtual asset service provider licences and extended access to asset distribution
COMPARED TO SINGAPORE ' S FUNCTIONAL REGULATION, HONG KONG HAS ADOPTED A MORE TYPICAL APPROACH TO REGULATION. ITS CORE SYSTEM TOOL WAS INITIALLY A VASP LICENSING SYSTEM LED BY THE CVM AND WAS FURTHER EXTENDED IN 2026 TO STABILIZE THE ISSUER LICENSING SYSTEM, GRADUALLY DEVELOPING A TWO-TIERED REGULATORY STRUCTURE FROM THE ENTRY POINT TO THE SUPPLY OF CORE ASSETS. UNDER THE VASP FRAMEWORK, AS LONG AS THE TRADING PLATFORM PROVIDES VIRTUAL ASSET TRADING SERVICES TO THE PUBLIC, IT MUST APPLY FOR AND HOLD LICENCES AND ACCEPT REGULATORY REQUIREMENTS THAT ARE HIGHLY SIMILAR TO THOSE OF TRADITIONAL SECURITIES BROKERS, INCLUDING CUSTOMER ASSET HOSTING AND SEGREGATION, INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS, INFORMATION DISCLOSURE AND COMPLIANCE AUDITS, AND APPROPRIATE SELECTION REQUIREMENTS FOR MANAGEMENT. IT IS WORTH NOTING THAT HONG KONG HAS NOT ATTEMPTED TO ADOPT LEGISLATION TO CLASSIFY TOKENS IN DETAIL, BUT RATHER TO FOCUS ITS REGULATION ON PLATFORM RESPONSIBILITY AND BROKERING, WHICH NEEDS TO BE INTEGRATED INTO THE OVERALL REGULATORY SYSTEM AS LONG AS THE PLATFORM ASSUMES THE FUNCTION OF BROKERING, HOSTING OR TRADING。
In terms of actual landing, Hong Kong's VASP (more accurately VATP) license is issued at a clearly cautious pace. At the beginning of 2026, the number of virtual asset trading platforms that had been licensed by the CVM ranged from 10 to 12, mainly including front agencies such as OSL, HashKey, and follow-up approved platforms such as HKVAX, HKbitEX, Bullish, VDX. However, “getting a license” is not equivalent to “effective exhibition”. Market feedback suggests that what is really happening in terms of transaction size and user awareness is still concentrated on a small number of head-to-head platforms, while the rest are at an early stage: part of the technology and compliance system is still in place, part of it is open to institutional or small-scale users and the overall level of business is relatively limited to a sense of market presence. At the same time, a number of platforms that have applied for licences (including multiple head exchanges) have chosen to withdraw their applications or withdraw from the Hong Kong market. For example, mainstream exchanges, such as OKX, Bybit, Gate.io, Huobi, have voluntarily withdrawn VASP license applications during the transition period, while multiple small platforms, such as HKVAEX, IBTEX, QuanXLab, have subsequently withdrawn or terminated the application process。
After 2025, with the gradual liberalization of the participation of retail investors, the system further reinforced the requirements for platform compliance and significantly raised the threshold for entry into the Hong Kong market. In terms of structural results, the Hong Kong model does not encourage a large influx of projects, but is intended to create a secure financial hub that is highly manageable and centred on compliance transactions, asset management and chain financial infrastructure. Institutions that have access to the system usually have greater financial capacity, compliance capacity and long-term operating expectations。
On this basis, with the formal landing of the 2026 stabilization currency issuer's licence, regulation further extends to the more central link of “assets issuance and credit creation”. The first licences were issued only to a small number of persons with a banking or large institutional background, showing clear high thresholds and centralization. Not only is Hong Kong regulating the market for encrypted assets in circulation, it has also begun to intervene directly in the supply mechanisms of the “currency layer” of the chain。
A synthesis of Singapore ' s practice with Hong Kong shows that so-called Asian regulatory friendship is not a loose rule, but rather a licensing system that quickly incorporates encryption into the established financial regulatory framework. The long-term impact of this path is that innovation is relatively manageable, but systemic risks are significantly reduced; markets are more institutionalized, compliant and long-term; and the encryption industry is explicitly seen as part of the financial system, not as an exception. This has also made Asia one of the first regions in the global encryption market to complete the transition from grey innovation to financial infrastructure in 2025。
Stabilization of currency plates: regulation of the movement from the entry point to the issuance of assets End
In April 2026, the Hong Kong regulatory system further extended this central element of the issue of the stabilization currency. According to the Hong Kong Financial Authority, on 10 April 2026, within the framework of the Stabilisation Currency Ordinance, Hong Kong officially issued the first licences for the issuers of stabilization coins, which were approved by only two institutions: the Shanghai HSBC Bank Ltd. in Hong Kong and the Bank of Slags in Hong Kong (Hong Kong), which led the joint venture of the Joint Telecommunications Profession Section and Animoca Brands. In this round, the regulators evaluated dozens of applications, but eventually approved only two, showing a very high threshold of access and a clear “limit card” feature。
UNLIKE PREVIOUS VASP PLATES, WHICH PRIMARILY REGULATE TRANSACTIONS AND BROKERING, THE STABILIZATION CURRENCY PLATES DIRECTLY RELATE TO THE MORE CENTRAL FINANCIAL FUNCTION OF “CURRENCY ISSUANCE AND CREDIT CREATION”. AS A RESULT, PRIOR TO THE OFFICIAL ISSUANCE OF THE STABILIZATION CURRENCY, THE LICENSED INSTITUTIONS STILL NEED TO COMPLETE A RANGE OF PREPARATORY WORK, INCLUDING TECHNICAL SYSTEM TESTING, RISK MANAGEMENT MECHANISMS, RESERVE ASSET ARRANGEMENTS AND COMPLIANCE OPERATING SYSTEMS. THIS CHANGE IS OF SIGNIFICANT STRUCTURAL SIGNIFICANCE: HONG KONG REGULATION IS EXTENDING FROM “PLATFORM ENTRY CONTROL” TO “CORE ASSET SUPPLY CONTROL” TO INCLUDE STABILIZATION CURRENCY IN A MODEL SIMILAR TO REGULATED DEPOSIT INSTRUMENTS. AT THE SAME TIME, THE DISTRIBUTION OF LICENCES IS HIGHLY CONCENTRATED ON SUBJECTS WITH A BANKING BACKGROUND OR LARGE INSTITUTIONAL RESOURCES, WHICH WILL STABILIZE THE RIGHT TO ISSUE CURRENCY WITH THE INTENTION OF CURTAILING AT LEAST A FEW HIGH CREDIT PARTICIPANTS。
Moreover, the fact that the first number of institutions to be licensed was dominated by banks and large financial-related entities, rather than by the encryption of original projects, reflects the intention of regulation to strengthen the security and compliance of reserve assets at source by using the traditional financial system as a credit point for the issuance of stable currencies. This orientation has not only changed the structure of market participation, but is also reshaping the logic of competition for stable currencies: the past patterns of globalization, dominated by Tether and USD Coin, are evolving into a new pattern of “regional regulatory dominance + distributed competition for compliance issuers”. The functional boundaries of the stable currency are also being extended from the encrypted trading medium to payment, liquidation and even settlement of real world assets (RWA). Against this background, Hong Kong ' s institutional practices are not only an upgrading of local regulation, but are likely to be one of the key reference routes for global currency stabilization, facilitating the transition from a secure market infrastructure to a broader financial infrastructure。
3.4 Summary: Regulatory Logic Consensus 2025
A synthesis of countries ' evolutionary paths to encryption regulation since 2025 shows that a clear consensus is emerging: the focus of regulatory attention is no longer on protecting innovation but on how it can operate within control. When encryption applications touch on real money and real risks, they must be incorporated into the financial order. This consensus can be understood as a three-tiered progressive regulatory bottom line: risks need to be seen, responsibilities need to be directed and failures need to be addressed. Whether deFi, sedentary currency or chain derivatives, the origin of assets, revenue structure, leverage levels and clearing mechanisms are being asked to present themselves in a more transparent and auditable manner, with black box-type risk stacking clearly narrowing. At the same time, the regulatory focus has shifted from decentrization to who actually controls the system. As long as there is a right to adjust parameters, front-end control or governance dominance, it means the corresponding subject of responsibility. More importantly, regulation does not attempt to eliminate the failure itself, but rather requires that failure be separable, determinable, reversible and avoid a single project or mechanism becoming a source of systemic risk. The regulatory logic of 2025 was not to deny Web3 but to set a clear boundary for it: to see risks, to find responsibility and to be able to fail. Innovations that can operate within this framework will provide a long-term space for survival。
4.2026 Policy focus forward: moving from price risk to systemic risk
In 2026, the regulatory logic will focus more attention on whether the encryption market will pose systemic risks; if so, how can it be bound by the existing financial framework? The nature of the risk has changed with the expansion of the stabilization currency, the maturity of the derivatives along the chain and the deep involvement of traditional institutions, and the gradual embedding of encrypted markets in real networks of financial flows and payments. What really needs to be discussed is not just the rise or fall in assets, but the soundness of the liquidity structure, the reliability of the clearing mechanism and the existence of a conduit between different markets。
4.1 Stabilizing the focus of monetary regulation or moving towards a macro-financial framework
The year 2025 addressed the question of whether or not the stable currency was legal and who regulated it. Perhaps more of our concern in 2026 is the financial chain in which the currency of stability will be placed. Regulatory discussions may no longer focus on the issue of qualifications per se, but rather on what role it plays in the financial system as a whole and whether there are spillover effects at the macro level. In the past few years, legal identification of the stabilization currency has been gradually completed. The mainstream market, through legislation or regulatory frameworks, makes clear requirements for issuers, reserve assets, foreclosure mechanisms, etc. The stabilization currency has been incorporated into the formal regulatory system and is no longer an innovative instrument outside the system. The deeper question is: Is it just a payment instrument or is it a financial vehicle with financial intermediation
A number of bills currently define stabilization currency as a payment-type tool, a position that emphasizes its function as a chain clearing medium, with regulatory focus on anti-money-laundering, financial traceability and the capacity to redeem at once. From this perspective, the stability currency is more like a digitized liquidation tool, with the core task of improving the efficiency of payments rather than assuming credit expansion functions. However, with the expansion of the stock of stable currency reserves, which are heavily allocated to assets such as short-term national debt, the volume of funds can already have an impact on the monetary market structure. Against this background, the regulatory perspective may move further from “payment security” to “financial stability”. If currency stabilization is seen as a currency-like market tool, the focus will shift to asset maturity matching, liquidity stress testing and centralized foreclosure risk management, with regulatory logic closer to macroprudential frameworks。
The stabilization currency in 2026 may assume the dual role of payment infrastructure and finance pool, and its regulatory focus may no longer be limited to a single sector, but rather involves synergies between central banks, fiscal and financial regulators. The impact of stable currency reserve structures on the demand for national debt and the potential impact of foreclosure pressures on short-term interest rates may be important topics for policy discussion. In terms of trends, stabilization currencies are shifting from “encrypted market instruments” to “macro-financial variables”. Once this shift is institutionalized, the logic of industrial competition will change. It is not only technical and user size, but also compliance, asset management and risk tolerance。
4.2 Chain leverage and liquidation risk: Is DeFi system secure
Over the past few years, the attention of regulators to DeFi has focused on compliance borders, investor protection and individual risk incidents. However, as chain lending, durability contracts, liquidity pledges and re-commitment structures overlap, DeFi's risk pattern is no longer limited to a single agreement, but is increasingly characterized by cross-agreements, cross-asset connections. In 2026, whether chain-led leverage structures will be incorporated into the regulatory vision of systemic risk is of great concern to us. At present, there is no uniform legal framework at the global level for DeFi leverage and clearing mechanisms and no clear capital adequacy or leverage cap rules. However, international institutions, including the Financial Stability Board (FSB), have begun to assess whether DeFi poses a functionally comparable risk to the traditional financial system, and the focus of regulatory discussions is shifting towards identifying the structural vulnerabilities of DeFi。
Chain-based clearing mechanisms are often perceived as having the advantage of transparency and automatic enforcement, but transparency is not equivalent to stability. In extreme cases, prognosis of price delays, network congestion, and competition among liquidation robots may magnify price volatility and increase pressure. When re-collateralization and multilayered leverage are added, the decline in asset prices may be quickly transmitted between agreements, blurring the risk boundary. While the process is algorithmic, its economic consequences are not fundamentally different from the ripple leverage in traditional finance. Unlike traditional finance, DeFi lacks a central counterparty and clear liquidity support arrangements. Traditional markets tend to rely on central bank instruments or market stabilization mechanisms under stress scenarios, while chain systems rely more on market-based liquidations and arbitrage to clear risks. As it expands, regulation may begin to focus on a larger issue: If the chain leverage is concentrated in a short period of time, will its impact spill over to stable currency markets, exchange liquidity and even affect the demand for short dollar assets
In terms of real progress, clear quota rules for DeFi leverage may not be immediately in place in 2026, but there may be more detailed changes in regulatory orientation. Regulatory authorities are likely to start with basic work to strengthen data collection and risk monitoring and to develop a framework for continuous assessment of chain leverage scale, mortgage asset structure and liquidation concentration. On this basis, the legal responsibilities and compliance boundaries of critical infrastructure closely related to DeFi operations, such as forecasting machine services, cross-chain bridges and front-end interfaces, may also be further clarified. At the same time, given the natural cross-border character of DeFi, regulatory collaboration and information-sharing mechanisms between jurisdictions are expected to become more important to reduce regulatory arbitrage and enhance overall risk identification capabilities. DeFi was not immediately included in strict prudential regulation, but was on the brink of macro-financial discussions. Its design logic may change as a result: from a simple quest for capital efficiency and maximization of returns to a greater emphasis on risk segregation, liquidity buffers and structural transparency. If regulation in previous years was concerned with DeFi ' s compliance, it would be more interesting to see whether 2026 was beginning to be seen as a potential financial infrastructure. Once this position has evolved, DeFi ' s institutional environment and competition will be reshaped。
4.3 PayFi and cross-border payments: regulatory focus on chain payment paths
In 2026, as in the case of stable currency, it was also a matter of concern whether the chain of payments based on stable currency would be formally incorporated into the regulatory framework for cross-border payments. With the combination of stable currency, compliance wallets and access routes, chain transfers have begun to provide real trade settlements for services and cross-border remittances. Once scaled up, it could no longer be just a technological innovation but could become a payment path outside the traditional banking system. There is no separate legal category for “PayFi”, but the relevant regulation already exists. The United States has included the issuer of the stable currency in its money transmission and anti-money-laundering regulation; the EU regulates electronic currency-type tokens under the MiCA framework; and Singapore, Japan and others have incorporated the stable currency into their payment laws. At the same time, FATF's “travel rules” have required virtual asset service providers to maintain identity information in cross-border transfers. Together, these rules form the basic regulatory framework for cross-border payments in the chain。
Towards 2026, the focus of regulatory attention may be on “impacting the cross-border financial order”. The core issues include the traceability of financial flows, the parallelization of the banking system, and the real impact on foreign exchange management or capital flows. In some emerging markets in particular, stabilization currencies have been used as a tool for cross-border settlement or value storage, which may prompt regulation to revisit the country ' s foreign exchange and payment management mechanisms. Thus, the more likely trend is not full tightening or full liberalization, but the incorporation of PayFi into existing cross-border payment control systems. The obligation to identify wallets may be strengthened, licensing requirements for access to the gold passages may be clearer and cross-border data reporting may be more standardized. “Who bears responsibility for compliance” will be a key issue when the issuer of the stable currency, the wallet and the channel of the French currency form a closed circle. From a trend point of view, PayFi is moving from a payment application to a new variable in the cross-border payment structure. There may not be subversive policy changes in 2026, but regulatory concerns about its macro-impact are clearly on the rise。
4.4 Key words for 2026: non-price risk, systemic importance, cross-market transmission
Taken together, the policy logic of 2026 can be summarized as a three-way shift。
(1) Shift from price volatility to structural stability. The real risk is no longer short-term rise or fall, but whether liquidity is mismatched, leverage overstretched, and a currency-stability risk. Prices are symptoms and structures are the root cause。
(2) Determination of system importance. When certain stabilization currency or derivative agreements are sufficiently large, they may be seen as systemic financial infrastructure. Once incorporated into this framework, reporting obligations, capital requirements and stress testing will be strengthened. The head platform will gradually move into the “parabanking” phase, while small agreements may face higher compliance thresholds and increased market concentration。
(3) CROSS-MARKET TRANSPORT. THE LINK BETWEEN ENCRYPTED MARKETS AND TRADITIONAL FINANCE IS DEEPENING, STABLE CURRENCY RESERVES AFFECT THE DEMAND FOR PUBLIC DEBT, AND ETF CAPITAL FLOWS CONNECT TO TWO MAJOR MARKETS, AND CHAIN-BASED LIQUIDITY FLUCTUATIONS MAY FEED BACK INTO A BROADER LIQUIDITY ENVIRONMENT. WHEN THIS CHANNEL BECOMES CLEAR, ENCRYPTED ASSETS ARE NO LONGER MARGINAL AREAS BUT PART OF THE FINANCIAL SYSTEM。
From “permissible or not” to “how to integrate” is the core change in the policy logic of 2026. Stabilized currency will be financialized, DeFi will be structured and chain payments will be institutionalized. Prices remain important, but what determines market patterns will be how risks are defined and managed。
5. How policies reshape encrypted market structures
We have discussed the policy course itself in the preceding parts, which we will focus on how policies in turn change the way markets operate. Regulation does not directly determine prices but profoundly affects product design, financial flows and risk allocation. As compliance borders become clearer, so does the competitive logic of the market. In the past, encrypted markets compared innovation to capital efficiency; as policy frameworks evolved, the focus of competition was shifting to structural soundness and risk control. In 2026, this structural transition could become a further deepening phase。
5.1 Changes in product patterns: from highly leveraged game to risk segregation design
Early encryption markets tend to attract liquid products with three characteristics: high leverage, high returns and low access thresholds. Successive contracts, revolving lending, and re-commitment and gains strategies are all pursuing capital efficiency. Such structures can rapidly magnify profits in a cycle of abundant liquidity and price increases; but in extreme cases, they can also magnify liquidation pressures and chain reactions. The problem is not the leverage itself, but the lack of clarity of the responsibility boundary. When product design lacks a clear risk-taker, or when liquidation mechanisms rely heavily on market games rather than risk buffers, losses are often borne by the weakest link in the event of sharp fluctuations. This structure is naturally unsustainable from a regulatory perspective, as it is difficult to integrate into an assessable and regulatory framework. As policies become clearer, markets are moving in another direction: modularization and risk segregation. Modularization is defined as the separation of functions such as transaction, hosting, clearing, revenue generation, so that risks can be clearly identified; and risk segregation is defined as the avoidance of pressure from a single asset or agreement to be rapidly transmitted to the system as a whole. For example, stricter mortgage design, independent clearing-house arrangements, separation of assets from operators, etc., are all part of this approach. Such a change could lead to a reduction in the bursting power of the product, but greater structural stability. Future mainstream product patterns may no longer attract users with extreme benefits, but rather emphasize transparency, auditing mechanisms and stress testing capabilities. The clearer the regulation, the more the market prefers to opt for designs that are sustainable over time rather than short-term arbitrage instruments。
5.2 Changes in financial pathways: from anonymous to identifiable mobility
One of the most direct effects of policies on markets is to change the way finance enters. Early markets were highly dependent on anonymous mobility, users were directly involved in borrowing or trading through their own wallets, and sources of funding were relatively dispersed. This open structure increases efficiency and leaves room for regulatory arbitrage. As anti-money-laundering rules, travel rules and a stable currency regulatory framework come to the ground, the financial path becomes clearer. Exchanges, wallet service providers and access corridors have increased compliance responsibilities, and institutional funds have become more marketable through hosting and auditing processes. Liquidity is thus stratified: one maintains a chain-based originality and the other has clear identity and compliance attributes. Such layers in turn affect the project structure. An increasing number of agreements separate the front end from the bottom of the contract and introduce compliance controls in the access layer while maintaining the logical openness of the chain. Some agreements establish stand-alone pools or permit mobility modules to attract specific types of funding. Market structures also show a multidimensional trend. The main chain is more like a value settlement and a safety layer, a second-tier network or a dedicated chain carrying high frequency applications. Regulation usually focuses on French-currency interfaces and critical infrastructure nodes, rather than trading on each chain. As a result, projects tend to focus on compliance pressures at entry and exit points and retain innovation functions in chain modules. Funding has not decreased, but has become more structured. Future competition is not just about the size of liquidity, but about how to effectively integrate funds between different levels of compliance。
5.3 Change in risk structure: Who bears the tail risk
Policies have also changed the way risks are assumed. Risks in the early encrypted market are spill-over, with liquidation mechanisms relying on automatic enforcement and market games, and losses are quickly transmitted in extreme fluctuations, mainly by leverage users or liquidity providers. The project itself has less formal risk buffer arrangements. When regulation began to emphasize transparency of reserves, asset matching and liquidation stability, agreement design was gradually adjusted. A growing number of projects have introduced risk reserves, insurance funds or stratification mechanisms to increase collateral rates and limit extreme leverage to reduce systemic shocks. This shift means that risks begin to internalize. In a context of greater legal accountability, distributors and platforms need to consider long-term viability rather than simply seeking scale expansion. The tail risk is no longer entirely left to the market for spontaneous absorption, but is distributed and absorbed in advance through structural design. Risks will not disappear, but will become more visible, measurable and priceable. Participants have a clearer understanding of their own risk boundaries, which has led to a shift in market structures from a high level of expansion to a more resilient pattern。
Looking ahead and trends: from “compliance adaptation” to “structural options”
When regulation moves from uncertainty to enforceability, the core issue of the market has fundamentally changed: it is no longer how to circumvent regulation, but under what structure it should involve. For projecters, exchanges and institutions, it will be necessary to identify, after 2026, which structures are sustainable in the long term and whether they are on track as permitted by the regulatory regime. The role of regulation is shifting from a “short-term mood variable” to a “long-term structural variable”. It no longer merely affects market volatility but begins to systematically reshape business models, sources of finance and competition patterns in different tracks. The fragmentation of markets is increasingly dependent on being embedded in regulatory systems。
6.1 Compliance is no longer a cost item but market access Rights
Over the past cycle, compliance is often seen as a passive cost, a constraint that has to be attached when the business matures. From 2025 to 2026, however, the policy evolved into an institutional screening mechanism whose central role is no longer to limit but to determine who can enter the market. Whether the U.S. legislation around market structures, the EU MiCA's landing or Hong Kong's licensing system around the platform for the stabilization of currency and trade, is essentially an advance answer to the question “Who can participate in the market”. As a direct result, the market has evolved into a hierarchical structure: one part of the body enters a strong regulatory system and receives institutional funding and compliance liquidity; the other part remains in greyscale or unlicensed innovation space and continues to bear higher uncertainty. Over time, there will be a growing segregation between the funds and the users of the two. The impact of this change on specific tracks has begun to be felt. Exchanges are no longer mere platforms, but have evolved into financial entry points for compliance, with licensing as a central barrier; projecters need to consider compliance pathways for issuance and liquidity at an early stage, otherwise it will be difficult to reach larger-scale funds; and institutional funds will be prioritized into assets and structures with clear regulatory identities. Compliance decisions are “eligible”。
6.2 markets will move towards a “two-track system”: a compliance finance layer vs chain innovation layer
From the practice of the major jurisdictions around the world, the encryption market is not uniformly integrated into a single system and is more likely to maintain a “two-track operation” structure over the long term. On the one hand, there is a compliance financial layer centred on stable currencies, ETFs, licensed exchanges and custodians, a system that emphasizes transparency, accountability boundaries and risk control, mainly through institutional funding and large-scale asset allocation, and on the other hand, an original innovation layer represented by DeFi and chain agreements, characterized by openness, experimentation and high-risk carrying capabilities. The two tracks will not be fragmented between them, but will result in limited connectivity through the stabilization currency, access to the passway and various compliance interfaces. Under this structure, the core capacity of the industry is no longer just a single-point product innovation, but rather how to establish a link between the two systems, bringing down-chain finance into the chain and transforming chain assets into financial products acceptable to the regulatory system. This has made DeFi no longer a fully independent financial system, but has evolved into a chain of implementation and innovation; centralized exchanges and custodians have become key hubs linking two tracks; and cross-chain, bridge and clearing infrastructure has shifted from technical tools to key nodes with financial attributes. Future competition will largely revolve around “who can become a connector”。
6.3 Stable currency will be a central entry point for the “new financial infrastructure”
THE STABILIZATION CURRENCY IS UNDERGOING A LEAP FROM TOOLS TO INFRASTRUCTURE. FROM 2026 ONWARDS, THE CORE EXTERNAL PROBLEM WITH THE STABILIZATION CURRENCY LIES IN THE QUALITY OF THE ISSUER AND HIS CREDIT RATING IN THE FINANCIAL SYSTEM. ACCORDING TO CURRENT LOCAL REGULATORY PRACTICE, THE POWER TO ISSUE STABLE CURRENCY IS CLEARLY CONCENTRATED IN BANKS AND HIGH CREDIT INSTITUTIONS. INSTEAD OF BEING A LIQUIDITY TOOL WITHIN THE ENCRYPTED MARKET, THE STABILIZATION CURRENCY HAS BEGUN TO BE EMBEDDED IN THE BROADER FINANCIAL SYSTEM AS A KEY INTERFACE BETWEEN THE CHAIN AND THE CHAIN. ITS FUNCTIONS HAVE ALSO BEEN EXPANDED FROM THE INITIAL TRANSACTION MEDIA TO PAYMENTS, LIQUIDATIONS, MORTGAGES AND EVEN RWA SETTLEMENTS, WHICH CHARACTERIZE THE “FINANCIAL OPERATING SYSTEM”. THE STABILIZATION TRACK ITSELF WILL RELY ON THE SCALE OF LIQUIDITY, SHIFTING TO CREDIT ENDORSEMENTS AND REGULATORY QUALIFICATIONS, WITH A SIGNIFICANT INCREASE IN THE HEAD CONCENTRATION EFFECT; THE PAYMENT TRACK MAY REVOLVE AROUND THE STABILIZATION CURRENCY, MAKING IT THE MOST LOCALIZED APPLICATION SCENARIO; AND THE DEVELOPMENT OF THE RWA WILL ALSO RELY HEAVILY ON THE STABILIZATION CURRENCY AS A CLEARING AND LIQUIDITY VEHICLE. THE POSITION OF THE EXCHANGE AS AN ENTRY POINT MAY BE PARTIALLY WEAKENED, WITH THE STABILIZATION CURRENCY NETWORK ITSELF HAVING THE POTENTIAL TO BECOME A NEW USER ENTRY。
6.4 Regulation moves from “rule-making” to “data-driven”
As the institutional framework evolves, the focus of regulation is shifting from rule-making to continuous monitoring and dynamic intervention. The future regulatory system, which is closer to a real-time system, relies at its core on data rather than static rule texts. The transparency of the data on the chain allows regulation to keep track of key risk indicators in the market, such as stabilization of currency size, leverage levels or liquidation concentration. In this context, regulation no longer relies on “one size fits all” restrictions, but is more likely to intervene in specific structures through targeted restraints and window guidance. This approach, while enhancing regulatory efficiency, also diverts market uncertainty from uncertainty as to whether to be regulated, but rather as to when and in what way to get involved. The importance of chain data and wind control capabilities has increased significantly, with the associated infrastructure upgraded from support tools to part of the regulatory collaboration. DeFi agreements also need to be designed in a more proactive manner to consider transparency and risk control, while areas such as high leverage, complex derivatives may be the focus of regulation and their innovation space is facing contraction。
6.5 Pattern evolution: from “open competition” to “structural concentration”
In the longer term, the ultimate impact of regulation is not to suppress markets, but to reshape their concentration. The obvious scale effect of compliance makes it easier for large institutions to bear the costs, gain trust and have stable interaction with regulation, which leads to a gradual concentration of resources towards a few subjects. In the process, key links such as exchanges, stable currency issuers and custodians have begun to show a trend towards head-to-headization. The future market structure is likely to evolve into a few core compliance infrastructure dominated by a large number of innovative projects around which the medium-size, neither completely decentrized nor compliant subjects will face continued squeeze. Such changes may equally be transmitted to the public chain and associated ecosystems, where there is a lack of core liquidity entry or compliance capacity, and may be progressively marginalized; and infrastructure capable of absorbing mainstream funds will have a stronger network effect。
6.6 DeFi compliance path: from “agreement neutrality” to “interface compliance”
The recent partial weakening of enforcement against DeFi reflects a delicate shift in the regulatory strategy: a more realistic path from the interface level than directly binding the bottom agreement. As a result, an increasingly clear direction is emerging: the agreement itself is neutral, but the entry and connection layers upon which it operates are regulated. From a practical implementation perspective, regulation may focus on the front end (Web UI), the development team or the operating entity, the liquidity portal (e.g., French currency access, stabilization currency) and the assets connected to the real world (RWA). DeFi is likely to evolve into a “layered compliance structure” in the future: bottom agreements maintain an open and decentrized character, while user access paths, financial entry and asset mapping components are gradually embedded in mechanisms such as KYC/AML, permit lists or geographic restrictions。
This evolution will directly change DeFi's development logic. In the past, the growth model, with the TVL at its core, would be gradually giving way to “fund quality and compliance access”. The space for purely unlicensed narrative agreements will be constricted, favouring experiment and long-term innovation, and projects that wish to take on larger-scale funding must proactively introduce compliance interfaces at some levels. DeFi structures that can be aligned with compliance funds, especially models integrated with RWA, are expected to become new mainstream directions; for example, the introduction of white-list pools, compliance stabilization currency settlements, or chain financial structures working with licensed institutions. This is actually repositioning DeFi: It is no longer merely an alternative system for traditional finance, but may become a chain of enforcement for regulating the financial system. True competition will also shift from “decentrization” to “how to embed regulatory requirements without undermining core efficiency”。
6.7 Track heavy pricing: from “flow competition” to “structure competition”
As regulation becomes a structural variable, the valuation logic of the market changes. The core drivers of past project valuations have been concentrated on indicators such as user size, volume of transactions and TVL, which will be relatively less important in the future and replaced by compliance capacity, financial attributes and ability to access regulatory systems. This change will lead to a marked division of the different tracks. DeFi, which divides the “compulsory structure” of institutional funding and the “unlicensed structure” of carrying innovative experiments; RWA, with its natural compliance interface properties, is expected to be the most direct beneficiary; the stabilization track will further strengthen head concentration, driven by a competition between credit and licence plates; the exchange will evolve towards an integrated financial platform; and the chain-based data and wind control infrastructure will become an implicit but critical support layer. The core of market competition is moving from “who betters” to “who is in a better structure”。
For industry participants, the regulatory era does not imply increased certainty, but rather changes in sources of uncertainty. Prices remain unpredictable, but structures are becoming predictable. Funds will flow to safer and more transparent systems; risks will be reduced to a more manageable range; and powers will be concentrated on those who have the capacity to comply. The real watershed lies not in the passage of a certain bill, but in the structure of you, over the long-term path that regulation permits。
7. Conclusion: a new stage in the encryption market in an institutional environment
As the regulatory framework becomes clearer, the encryption market is undergoing a deep-seated process of restructuring. Policies do not determine price trends, but are changing how products are designed, how funds are entered and how risks are distributed. The competitive logic of markets has thus shifted from efficiency to structural priorities。
The high growth in the past was based on high leverage, embedded gains and risk spillovers. Against the backdrop of increased transparency in the regulation of stable currency reserves, robust liquidation mechanisms and the traceability of cross-border funds, such highly overlapping structures with blurred liability boundaries will become increasingly unsustainable. On the contrary, clear reserves, risk segregation, clear design of clearance paths and easier access to long-term funding and institutional space。
This shift does not mean an end to innovation, but rather a change in the direction of innovation. The rise in compliance costs, operating costs and capital occupancy costs has raised industry thresholds, but has also contributed to a shift in markets from disorderly expansion to robust growth. Risks will not disappear, but will be more transparent, measurable and distributed ahead of schedule, rather than passive exposure in crisis。
Encryption forms are being institutionalized. The brutal growth phase is retreating and the stabilization and expansion phase is gradually unfolding. Policies are not market ceilings, but filters of growth paths. Projects that strike a balance between transparency and efficiency are more likely to cross the cycle and become the core structure of the next phase。
References
Cryptocurrency Studies 2026: What Trackers Must Know Now: https://sqmagazine.co.uk/cryptocurrency-regulations-impact-statistics
Guiding and Establishing National Innovation for U.S. Stablecoins Act or the GENIUS Act: https://www.congress.gov/bill/119th-congress/senate-bill/1582
3. The Payments Newsletter including Digital Assemblys & Blockchain, August 2025: https://www.hoganlovels.com/en/publications/the-payments-newsletter-inclusion-digital-assets-blockchain-august-2025
4. Cripto-asset Tuxonomy for Investments and Regulators: https://arxiv.org/abs/2602.05098
5. Thematic Review on FSB Global Regulatory Platform for Crystal-Asset Activities: https://www.fsb.org/2025/10/thematic-review-on-fsb-global-regional-framework-for-crypto-asset-activities
6. ESRB publications report on systemic issues from crypto-assets and issues on stablecoins: https://www.esrb.europa.eu/news/pr/date/225/html/esrb.pr251020~84e90cc73.en.html
G20 risk watchdog warns of 'significant laps' in global crypto rules: https://www.reuters.com/ustainability/boards-policy-regulation/g20-risk-watchdog-warns-significant-gaps-global-crypto-rules-2025-10-16
8. ASRI: An Aggregated Systemic Risk Index for Criptocurrency Markets: https://arxiv.org/abs/2602.03874
9.A Risk Media Model of Medical Affairs with Stablecoins: https://arxiv.org/abs/2510.10469
Strangthening American Leadship in Digital Financial Technology: https://www.whitehouse.gov/presidential-actions/205/01/strengthening-american-ledship-in-digital-financial-technology/
11. Papan to give crypto asses legal status as financial products, Nikkei says: https://www.reuters.com/technology/japan-give-crypto-assets-legal-status-financial-products-nikkei-says-2025-03-30
UK sets out crypto regulatorial processes: https://moneyweek.com/investments/bitcoin-crypto/uk-sets-out-crypto-regulatory-proposals
13. Payment Services Act 2019: https://sso.agc.gov.sg//Act/PSA2019
14. Markets in Cripto-Assets Regulation (MiCA): https://www.esma.europa.eu/esmas-activities/digital-finance-and-innovation/markets-crypto-assets-regulation-mica
15. Digital Assembly Market Clarity Act of 2025: https://www.congress.gov/bill/119th-congress/house-bill/3633/text
16. US Senate returns the digital asset markt situation arena:https://coingeek.com/us-senate-re-enters-the-digital-asset-mark-strate-arena
17. Bessent cities Congres to pass crypto reconstruction bill:https://www.reuters.com/legal/governance/bessent-urges-congress-pass-crypto-regulation-bill-2026-04-09
18. Stable coins are issued to issue dealer ' s licences:https://www.hkma.gov.hk/chi/news-and-media/press-releases/2026/04/20260410-4/
