Why 2026 could redefine the crypto market structure

According to market participants, crypto markets are likely to see liquidity concentrated in fewer locations by 2026 as new regulatory frameworks and institutional participation come to shape the way trading actually functions.

Algorithmic trading and market-making company Auros noted this in its annual reflections for 2025 Declutter that while decentralized finance has continued to grow, maintaining that momentum will require a fundamental upgrade in the way liquidity functions.

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

SB Seker, head of APAC at Binance, shared the same sentiment and was telling Declutter that “innovation, regulation and market infrastructure are increasingly aligned, reshaping the dynamics of the global market.”

This year will test whether markets can support institutional execution standards and absorb volatility without the vulnerability exposed during the October months. liquidity crisiswhen more than $19 billion in leveraged positions were liquidated in about 24 hours and the order book on the major trading platforms evaporated.

More importantly, it will reveal whether the regulatory frameworks translate into operational improvements in the way financial institutions manage risk, maintain liquidity and prevent cascading bankruptcies that institutional treasuries cannot absorb.

Regulations in line

The European MiCA framework came into effect in December 2024, requiring crypto companies to secure EU licenses and meet stricter security, transparency and consumer protection standards by the end of transition periods running until mid-2026.

The Asian regulatory scenario centers around similar themes as in Hong Kong has introduced its stablecoin licensing framework last August, with the first licenses expected in early 2026.

Meanwhile, Japan is on its way to reclassification of major cryptos as financial products, with a flat tax of 20% from 2026.

“While 2025 was a milestone for establishing regulations for virtual assets, 2026 is when the proverbial rubber will hit the road,” Musheer Ahmed, founder and managing director of Finstep Asia, told me. Declutter.

“Following the introduction of groundbreaking legislation last year [Genius Act]we anticipate the next phase of regulation that goes beyond licensing and defining regulated activities,” said Ahmed.

The market will likely see “a divergence in activity,” Ahmed said, with one segment targeting “crypto purists who prefer purely decentralized models” while international regulators assess these structures for potential frameworks post-2027.

If the traditional financial sector is to “confidently grow its scale in digital assets,” he said, “strong governance and a well-defined market structure are paramount,” along with clear rules to bridge the gap in areas such as tokenized security.

American momentum

In the US, legislation governing the country’s crypto market structure continues to evolve towards one possible breakthrough.

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

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

However, tensions remain with Senator Cory Booker earlier told Declutter he does not trust the White House’s assurances about the appointment of Democrats to the financial regulators and calls this ‘a major concern’.

The question facing markets is whether infrastructure can evolve fast enough to support the institutional demand that is now evident everywhere tokenized assets, stable coinsand ETF-linked flows, without periodic vulnerability during stress events that institutional capital cannot tolerate.