Outdated Rules Are Holding Crypto Back

Crypto M&A activity in the first two quarters of 2026 already exceeded all of 2025, itself a record year, with deals including Blockworks acquiring Messari, Kaiko acquiring Amberdata, and Robinhood acquiring WonderFi. The Blockworks-Messari combination targets asset issuers seeking to build trust and investors seeking AI-powered evaluation tools, and further consolidation is expected across the sector.

On Bitcoin price, Galaxy Digital placed the likely bottom at 40,000 to 50,000 dollars and Standard Chartered placed it at 59,000 dollars, with BTC roughly 20 percent down after failing to cross both the 200-day moving average and the short-term holder cost basis. There is a 100 percent historical track record of a bottom forming once BTC does cross both levels, and buy pressure has consistently appeared near 60,000 dollars. The consensus view is that BTC will range trade between 60,000 and 80,000 dollars absent a major macro shift. One speaker argued that debating the exact bottom is the wrong question given long-term structural supports including accelerating government debt, falling institutional trust, increasing digitization, and a younger and wealthier demographic, and predicted new all-time highs regardless of whether Bitcoin chops sideways for several more months. BTC is no longer correlated to money supply or the ISM, putting historical models into question.

The SEC proposed rescinding Rule 611 and Rule 610E, two components of Regulation NMS enacted in 2005 when only 13 percent of NYSE volume happened off exchange. By 2026 approximately 50 percent of NYSE volume happens off exchange, a figure the SEC itself cited in its regulatory documents. Rule 611 requires any securities venue to quote at the nationally available best price, effectively collapsing all markets into one unified market, while Rule 610E prohibits showing quotes that cross the national best bid and offer. The proposed change moves from a strict rules-based best execution requirement to a principles-based approach at the broker level, with FINRA Rule 5310 as the fallback. Rescinding Rule 611 has been a priority for SEC commissioners Atkins and Peirce for years, and the rule changes are expected within months following a roughly 60-day public comment period.

Rescission of best execution rules is identified as a key piece of legislation needed to fit tokenized securities into traditional rails, because AMMs cannot comply with Rule 611 since a bonding curve cannot respect the national best bid and offer. Even if Rule 611 is rescinded, AMMs would still need to meet the Rule 3B16 definition of an exchange, register as an ATS, and be operated by a broker-dealer. Securities must currently sit in a qualified custodian and be maintained by a transfer agent, requirements incompatible with blockchain-based trading, and a permissionless on-chain contract cannot register as a broker-dealer or fulfill transfer agent requirements. The SEC innovation exemption, described as the most important near-term market structure regulation for tokenized stocks, has been pulled back or delayed with no indication of when it will resume. Hyperliquid trading equities perpetuals over the weekend was cited as evidence that over-regulation is already pushing activity to offshore venues outside SEC jurisdiction.

Accredited investor rules prohibit retail investors from buying shares in Anthropic, OpenAI, and SpaceX, meaning only the wealthiest one percent and institutions have had legal access to the most economically significant private companies. By the time major private tech companies go public they are already trillion-dollar companies, which was cited as evidence the rules failed earlier. A PhD in finance earning 60,000 to 100,000 dollars per year does not qualify as an accredited investor under current rules. One speaker warned that if AI displaces jobs at scale, it will be a serious indictment of regulators that displaced workers could not own the AI stocks that caused their job losses.

Q2 2026 saw the highest number of DeFi hacks in any single quarter on record. Of the last 77 DeFi hacks tracked on DeFi Llama, approximately 80 percent were caused by protocol logic failures and approximately 12 percent by private key compromises, though dollar value skews heavily toward private key compromises. Most Q2 hacks were attributed to human error and key management failures rather than flawed code, with admin keys held by a small number of players identified as a primary centralization choke point. One speaker attributed the Q2 spike in private key compromises to AI-related threats, noting a simultaneous cluster of such incidents is difficult to attribute to coincidence, while acknowledging limited cybersecurity expertise. A major AI-driven DeFi hack was flagged as a potential trigger for collective loss of institutional confidence in crypto. Speakers predicted meaningful improvement within six to twelve months but cautioned the next six to eighteen months could remain rocky as powerful models are launched and pulled back unpredictably. Securities on chain were noted as one structural mitigation, since non-bearer assets can be burned and reissued to the rightful owner if stolen.

The SEC approved for the first time an actively managed multi-asset crypto ETF, with T. Rowe Price receiving that approval. The approved asset list appears concentrated on assets classified as crypto commodities including BTC, SOL, XRP, Cardano, and Avalanche, and excludes assets such as Hyperliquid. BlackRock's Bitcoin covered call ETF listed the day before recording, and Goldman Sachs has a similar product in the pipeline.