Crypto markets are likely to see liquidity concentrate across fewer venues in 2026 as new regulatory frameworks and institutional participation begin to shape how trading actually functions, market participants say.
Algorithmic trading and market-making firm Auros noted in its 2025 annual reflections shared with Decrypt that while decentralized finance has continued to grow, sustaining that momentum will require a fundamental upgrade in how liquidity functions.
"Despite the turbulence, DeFi TVL continues its steady climb, but sustaining it will demand a step-change in on-chain efficiency in 2026," the firm said, calling for "deepening liquidity across key DeFi venues, tightening spreads, and improving execution quality."
SB Seker, Head of APAC at Binance, shared the same sentiment, telling Decrypt that "innovation, regulation, and market infrastructure are increasingly aligned, reshaping global market dynamics.”
More critically, it will reveal whether regulatory frameworks translate into operational improvements in how venues manage risk, maintain liquidity, and prevent cascading failures that institutional treasuries cannot accommodate.
Europe’s MiCA framework came into force in December 2024, with crypto firms required to secure EU licences and meet stricter security, transparency, and consumer-protection standards by the end of transitional periods that run until mid-2026.
‘While 2025 was a landmark year for establishing virtual asset regulations, 2026 is when the proverbial rubber will hit the road,” Musheer Ahmed, Founder and Managing Director of Finstep Asia, told Decrypt.
"Following the introduction of landmark legislation last year [Genius Act], we anticipate the next phase of regulations to move beyond licensing and defining regulated activities," Ahmed said.
The market will likely see "a divergence in activities," Ahmed said, with one segment catering to "crypto purists who prefer purely decentralized models" while international regulators review these structures for potential frameworks beyond 2027.
For traditional finance to "confidently increase 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 like tokenized securities.
The bill, which passed the House with bipartisan support last July, would establish the first comprehensive federal framework defining regulatory jurisdiction between the SEC and CFTC.
