Over the past few years, the central debate in U.S. crypto regulation has hinged on one basic question: are tokens securities?
Now, the answer has finally become clear.
Recent developments—from the SEC’s rollout of the Token Safe Harbor framework, to its joint definition of “digital commodities” with the CFTC, to the growing acceptance of crypto assets by the CFTC and traditional financial institutions such as the New York Stock Exchange—all point to one thing: U.S. regulators are systematically rewriting the rules of the game.
The most significant development came on March 17, when the U.S. Securities and Exchange Commission (SEC) issued guidance on crypto assets clarifying that digital commodities, digital collectibles, digital utility assets, and payment stablecoins (as defined under the GENIUS Act) are not securities. By contrast, only tokenized forms of traditional securities—classified as digital securities—are clearly subject to securities regulation.
This marks the end of the “regulation by enforcement” era ushered in under Gary Gensler. In its place is a clearer and more predictable regulatory framework. It also means that the assets we hold are moving out of the gray zone and more quickly into the mainstream financial system.
1. Clearer Classification: Tokens Are No Longer Presumed to Be Securities
Broadly speaking, the SEC’s new Token Safe Harbor framework is highly consistent with the position Chair Paul Atkins has taken since assuming office.
Together with the SEC and CFTC’s decision to classify Bitcoin, Ethereum, Solana, and 13 other major tokens as “digital commodities,” this means these assets will be regulated primarily by the CFTC rather than by the SEC under securities law. It also marks the first clear division of authority between the two agencies, meaning the question of whether a token is a security is no longer left in a vague gray area.
That likely means tokens and digital securities will evolve along two very different tracks, with the SEC focusing mainly on tokenized forms of traditional securities.
In effect, this closes the gray zone. Whether a token is a security no longer needs to be decided case by case through the ambiguous Howey Test, and regulatory jurisdiction is now clearly divided for the first time.
The SEC also raised an especially interesting point: an investment contract can end. Once a project team has fulfilled its core promised obligations, a token may no longer carry securities status. In other words, being a security may no longer be a static label, but something that changes as a project evolves.
Put simply, a project may move from security to non-security status, or the other way around, falling under the SEC or the CFTC at different stages.
If legal classification clarifies an asset’s status, then the latest moves by the NYSE and the CFTC are a tangible positive for market liquidity and capital flows.
On one hand, the NYSE has removed the 25,000-contract position limit on BTC and ETH ETF options. On the other hand, the CFTC now allows BTC, ETH, and stablecoins to be used as collateral, with BTC and ETH valued at 80% and stablecoins at 98%.
Although these collateral ratios still fall short of the 90%–95% levels common on exchanges—for example, Binance applies a 0.95 ratio to BTC and close to 1:1 for stablecoins—this is still an important first step. Traditional financial institutions and institutional investors can now use crypto assets as collateral for leveraged and portfolio trading, helping bring crypto further into formal asset allocation frameworks.
Taken together, these two developments show that crypto is being integrated more quickly into the traditional financial risk framework, evolving from a pure trading asset into one with collateral and other financial functions.
2. Global Stablecoin Regulation Accelerates: Defining Stablecoins as Payment Tools While Ring-Fencing Yield
As the classification of crypto assets becomes clearer, regulators are also taking a more precise approach to stablecoins.
Over the past two years, the stablecoin narrative has continued to gain momentum. A key reason is that stablecoins are no longer just trading instruments. They increasingly function as on-chain dollar interfaces and settlement tools, and in some cases are even starting to resemble savings or yield-bearing accounts. That has quickly heightened tensions between stablecoins and the traditional banking system.
Earlier this month, Reuters reported that discussions over amendments to the U.S. CLARITY Act had once again stalled. One of the core disputes was whether users should be barred from earning returns simply by holding stablecoins. Based on the disclosed discussions, the bill would prohibit interest payments to consumers, while some versions would still allow rewards or incentive programs tied to specific activities such as payments or loyalty schemes.
That distinction is precisely why the banking industry has continued to push back, arguing that even if it is framed as a “reward” rather than “interest,” it could still materially pull deposits away from banks.
Against that backdrop, Circle shares plunged nearly 20% intraday on March 24, while Coinbase fell close to 10%. Viewed from this angle, the market’s recent reaction to stablecoin-related companies is not hard to understand.
This is also likely related to USDC’s growth strategy. USDC has expanded quickly over the past period, in large part by using subsidies, revenue-sharing, and incentives to compete for distribution across exchanges, platforms, and users. If the path of offering returns for passive holding is blocked, those returns will likely not disappear—they will shift into more complex structures, such as promotional incentives, DeFi, RWA, or trading-related use cases.
That is why restrictions on stablecoin yield may look like tighter regulation on the surface, while at a deeper market-structure level they may actually be reshaping how the next round of returns will be distributed. In the future, the most competitive stablecoin may not be the one offering the highest yield, but the one with the deepest liquidity, broadest access, strongest use cases, and highest settlement efficiency.
In that sense, this regulatory shift may not be inherently bearish for USDT. USDT’s core advantage has never been deposit-like returns, but its global liquidity, first-mover network effects, and broad market reach.
By contrast, if the model of “earning returns simply by holding” is further restricted, stablecoins that rely more heavily on subsidies and incentives to drive distribution may face greater pressure to adjust. Reuters also noted that banks worry stablecoins could trigger deposit outflows, with some research estimating that the U.S. banking system could lose hundreds of billions of dollars in deposits by 2028. That helps explain why regulators remain highly cautious about yield-bearing stablecoins.
At the end of the day, what the United States wants from stablecoins is not an “on-chain high-yield account,” but an “on-chain dollar interface.” It can be used for payments, clearing, cross-border transfers, and financial infrastructure, but it is not meant to become a direct substitute for liabilities within the traditional banking system.
3. Prediction Markets Go Compliant: The Price of Becoming a “Truth Machine”
If token classification and stablecoin regulation address the question of asset identity, then changes in prediction markets are better understood as regulators redefining the relationship between crypto and highly sensitive real-world events.
Over the past year, prediction market platforms such as Polymarket have repeatedly gained mainstream attention around U.S. elections, macro data, and geopolitical events. That has reminded more people that prediction markets are not just on-chain betting entertainment, but potentially a highly marketized mechanism for aggregating information.
In a recent public speech, CFTC Chair Michael Selig said he hopes prediction markets, when combined with blockchain technology, can become a force against misinformation, distorted narratives, and financial exclusion. Many have summarized that view as the idea that prediction markets could become a “truth machine.”
At the same time, the CFTC is clearly moving faster to bring prediction markets and event contracts into a key regulatory framework. Once prediction markets become deeply tied to highly sensitive real-world events—such as politics, sports, entertainment, war, and public policy—they are no longer just pure information markets. They quickly run into issues such as manipulation, insider trading, the boundary with gambling, and misaligned real-world incentives.
That is why recent moves in this area all share a common pattern: regulators are recognizing the value of information aggregation while quickly carving out the scenarios most likely to create problems.
For example, Kalshi has publicly said it will prohibit political candidates from trading in markets related to their own campaigns, and will also bar athletes, coaches, referees, and other relevant participants in professional and college sports from trading in markets tied to events they are involved in. Polymarket also updated its market integrity rules in March, explicitly banning trades based on stolen information, illegally obtained information, or other improper sources, while tightening restrictions on market manipulation and misuse of information.
The logic behind these moves is becoming increasingly clear: if the market tied to a match, election, or policy outcome grows large enough, insiders, related parties, interest groups, and others with informational advantages all have stronger incentives either to influence the outcome itself or to trade ahead using non-public information.
Sports and entertainment are especially sensitive because they are high-frequency, mass-market, and emotion-driven, and because participants often have more direct influence over outcomes. As a result, regulators are far more likely to view them as disguised gambling rather than serious information markets.
Taken together, recent shifts in U.S. regulation are no longer simply about cracking down or stepping back. What is emerging instead is a more systematic, layered, and structured reshaping of the rules:
- The SEC no longer treats tokens as securities by default;
- The CFTC and SEC are moving toward clearer coordination and a clearer division of responsibilities;
- BTC, ETH, and stablecoins are gradually being brought into options, collateral, and risk management frameworks;
- Stablecoins and prediction markets are being pushed onto two different paths: one as payment tools, the other as restricted information markets.
In other words, crypto is no longer being treated as a vague whole. It is starting to be broken down into different asset classes, functional interfaces, and real-world scenarios, each of which is being placed into its own regulatory framework.
For users, this means a more predictable environment is starting to take shape. For the industry, it means the next round of competition will no longer be just about who tells the best story, but increasingly about who can better adapt to new regulatory boundaries and better connect on-chain innovation with the real-world financial system.
2026 may not be the year crypto fully breaks free from regulation, but it could well be the year it truly enters an era of regulatory differentiation, value repricing, and institutional realignment.