This week, in the time zone of UTC+8, several key regulatory clues surrounding crypto assets were simultaneously tightened and then put on pause: the discussions on the crypto market structure in Washington were unexpectedly delayed, Coinbase, which had previously supported related legislation, suddenly withdrew its support, while Moldova, located on the edge of Europe, chose to accelerate alignment with the EU's MiCA-style framework. The uncertainty in regulatory direction, combined with anxiety from institutions like Auros about the market's genuine depth, forms a dual axis in the current narrative. On one side is the tug-of-war between regulatory clarity and innovation protection, while on the other side, insufficient liquidity and depth may amplify systemic risks and volatility. The market is testing the next phase of the cycle under the intertwining of these two forces. What is truly worth questioning is how the legislative progress and global capital flows will reshape the rhythm of the upcoming crypto cycle at a time when the regulatory path is still not defined and liquidity has already shown signs of fragility.

Regulatory Gaps with the Meeting on Pause

This week, the U.S. Senate Banking Committee's discussion on the crypto market structure was postponed, and the microphones in the meeting room were temporarily turned off, but the closed-door negotiations around the related legislation did not stop. What the outside world sees is the process of the bill's text being continuously modified, reversed, and weighed between different interests and positions. The consensus on regulation is still some distance from being realized, but it is no longer in a state of complete suspension. Senator Lummis emphasized in a public statement that, under the push of Chairman Tim Scott, the time for the digital asset industry to gain the regulatory clarity it deserves is "very close." This optimistic judgment reflects the contradictory mindset within the regulatory side, where there is an acknowledgment of the need to provide rules, yet disagreements still exist on specific boundaries and intensity. For institutions that have long operated in a gray area, this fluctuating signal is not just political rhetoric but a substantive constraint: regulatory ambiguity has delayed the iteration rhythm of compliant products and infrastructure, leading some institutions to choose to wait and see rather than increase long-term positions, and making innovation teams more hesitant about whether to enter the U.S. market and how to design compliance paths. The more lacking a clear timetable, the easier it is for the market to amplify concerns amid various rumors and expectations. Each time regulation hits the pause button, it weakens a portion of potential compliance increments in unseen ways.

Policy Turnaround from Support to Withdrawal

In contrast to the rhythm on Capitol Hill, the positions of leading industry platforms are also undergoing significant adjustments. Coinbase had previously publicly supported the ongoing discussions on the crypto market structure bill, hoping to provide clear regulatory boundaries for trading, custody, and other businesses through legislation. However, in this week's public discourse, this leading U.S. platform announced the withdrawal of its support for the current version of the related bill, with the framework focusing on the sections concerning DeFi and tokenized assets. According to public information, Coinbase is concerned that the existing wording may place some protocol developers, front-end operators, and even liquidity providers under high compliance risk without fully understanding the differences in technology and business models, thus turning rules originally intended to "clarify" into shackles that stifle innovation. If legislation proceeds directly along this line, the industry will face not only rising compliance costs but also institutional uncertainty itself: developers will find it difficult to predict future liability boundaries, and market makers and capital providers will struggle to determine which forms of participation will be considered regulated activities. This shift from support to withdrawal sends a clear signal to other U.S. projects and global regulators—what the industry needs are executable, predictable rules that allow for technological evolution, rather than draconian clauses that attempt to "sweep up" all new business forms with a high-pressure attitude. Coinbase's turnaround is both a defense against its own risk exposure and an attempt to upgrade the game of reshaping negotiation leverage before legislation takes shape.

Market Cross-section Amid Depth Anxiety

While regulatory news dominates the headlines, concerns about the market structure are also being raised more frequently. Jason Atkins from the market-making institution Auros publicly emphasized that the key to the next phase of crypto market development lies in genuine market depth and liquidity, rather than short-term speculation driven by topics and emotions. From his perspective, many trading pairs appear to be active on the surface, but a deep dive into the order book reveals that the actual buy and sell orders are quite thin, and a slightly larger single transaction can tear apart the price spread, pushing prices sharply up or down. This state of "amplified transactions without solidifying depth" makes the leverage chain more susceptible to concentrated liquidations during severe fluctuations, leading to irrational price spikes or crashes in a short time. Coupled with the current general observation of institutional funds being on the sidelines, the unresolved regulatory framework, and market makers and long-term funds tending to maintain light positions and short durations, the regulatory tug-of-war objectively further drains the patient capital that could have entered the bottom of the order book. Thus, a hidden but important clue emerges: if there is only a compliance narrative without a continuous inflow of long-term funds and market-making supply, this "compliance bull market supported by expectations" is unlikely to stand firm. In reality, regulatory progress and liquidity recovery are often mutually dependent—an environment lacking rules struggles to attract deep participation from large institutions, while a market without sufficient depth will weaken regulators' confidence in promoting local industry development.

Small Countries Taking the Lead with MiCA Bets

While the U.S. is still working on a large framework, some small countries have chosen a different path. Recent public reports indicate that Moldova plans to implement a regulatory framework similar to the EU's MiCA around 2026. This timeline currently comes from a single source, but the directional judgment conveyed is quite clear: in the reality of limited resources and the high cost of building a complete system, directly "borrowing" the MiCA, seen as a mature template, becomes a more cost-effective choice. The EU's MiCA is being used as a standardized blueprint by many jurisdictions, and as small countries align, they can quickly delineate regulatory "runways" for local exchanges, custodians, and cross-border service providers by referencing existing rules, avoiding prolonged gray areas. At the same time, they can position themselves as an extension market compatible with EU legal systems, providing entry opportunities for compliant platforms looking to expand into more regions. Of course, aligning with MiCA in advance also means that local participants must face higher entry barriers and ongoing compliance costs, but for institutions capable of meeting the requirements, this may actually be an opportunity to enhance competitive barriers and strive for regional hub positioning. If more small countries follow a similar route in the future while U.S. regulation remains stagnant and fluctuating, then in the context of international competition, the attractiveness of U.S. project locations and user flow advantages may gradually be eroded. Global traffic and developers will be more willing to settle in regions where "rules are known and risks can be calculated," and once this migration trend forms inertia, it will be difficult to completely reverse.

Regulatory Lag and Liquidity Spillover

Connecting the delays in U.S. legislation, Coinbase's withdrawal of support, Auros's concerns about depth, and Moldova's embrace of MiCA presents a global picture of misaligned rhythms. On one end is the large framework still being refined in Washington, struggling to move forward amid interest games and partisan divisions; on the other end, Europe and some small countries are first providing a complete set of executable rules, then fine-tuning and repairing them in practice. This path difference will directly affect how institutional funds, market-making teams, and liquidity networks built around DeFi reallocate resources across different jurisdictions. During uncertain periods, funds tend to flow toward markets with clear regulatory boundaries and higher expectations of legal applicability, and technical teams will prioritize building compliant interfaces and front-end access locally. Relatively ambiguous regions may temporarily attract some high-risk innovations due to a loose environment, but after scaling up and facing rising risks of litigation, they will have to confront the costs of "catching up." At this current juncture, a truly sustainable regulatory solution should not simply choose sides between centralized platforms and DeFi protocols, but rather reserve enough space for innovation and migration for platform providers, protocol layers, and liquidity providers. Only when rules allow business models to iterate within a compliance framework, permit funds to flexibly convert between different forms, and maintain baseline constraints on systemic risks, can the tension between regulation and liquidity potentially transform into a driving force for industry maturity, rather than a one-sided crowding-out effect.

Key Observational Coordinates for the Next Act

Returning to the present, two main lines are clearly advancing simultaneously: one is the race for regulatory clarity represented by the U.S.; whoever can first provide predictable rules for the crypto market will have a greater opportunity to lock in high-quality projects and long-term funds in the next cycle; the other is the redrawing of the global liquidity map, with market-making depth, institutional positions, and DeFi capital pools being continuously rearranged along regulatory boundaries and tax costs. Moving forward, several key observation points are worth continuous tracking: the U.S. Congress's rescheduling of meetings on crypto market structure and their topic orientation in the coming months, the strategic changes of Coinbase and other leading platforms in the lobbying arena, and whether the list of countries aligning with MiCA continues to expand and form a stable "rules alliance." In this process, the short-term market is likely to remain in a state of high volatility under the dual effects of regulatory noise and liquidity fragility, with sentiment-driven and news trading repeatedly dominating local market conditions. However, the longer-term trend ultimately depends on whether major global regulators and industry participants can find a new balance among the rigor of rules, freedom of innovation, and market depth. Only when legislation is no longer seen as a "risk event," but as infrastructure for improving liquidity quality and enhancing market resilience, can this round of the game between regulation and liquidity truly enter the next act.

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