On February 18, 2026, in the time zone of UTC+8, on the stage of the large developer conference ETHDenver in the United States, SEC Chair Paul Atkins and Commissioner Hester Peirce launched a joint regulatory plan codenamed “Project Crypto” and announced that they would collaborate with the CFTC to advance the regulatory framework for crypto assets. The highlights of this move are: on one hand, the SEC plans to release a framework for determining "investment contracts" for crypto assets in the coming weeks to months; on the other hand, the regulators are considering the introduction of a pilot mechanism for "innovation exemptions," leaving limited compliance space for tokenized securities and related agreements. As regulatory boundaries begin to be outlined in advance, the long-standing tension between "regulatory clarity" and "speed of crypto innovation" has been pushed to a whole new level of game.
Regulatory Appearance on the Stage of ETHDenver
● Public Appearance Method: On February 18, at the highly attended ETHDenver, Paul Atkins and Hester Peirce participated in an open dialogue as regulatory guests, with related information primarily sourced from the conference live broadcast records and subsequently referenced in the statements on the SEC official website. Their appearance was not a routine presentation but a concentrated release regarding future regulatory directions, clearly identifying "Project Crypto" as the core vehicle of this round of policy signals, transforming this technical conference into a forefront of crypto regulatory narrative.
● Positioning of Project Crypto: According to research briefs and public information, Project Crypto is identified as a joint regulatory project between the SEC and CFTC, aimed at coordinating the classification and applicable rules of crypto assets under the attributes of securities and commodities. The official statement emphasizes that this aims to establish a "more predictable compliance path" for the crypto asset market rather than simply expanding the enforcement scope. It seeks to consolidate the previously scattered judgment standards across different departments and cases into a publicly discussable and replicable framework.
● From Individual Enforcement to Coordinated Path: Compared to the SEC's previous approach of "individual combat" through case lawsuits and settlement agreements prior to 2025, the high-profile announcement of a direct collaboration with the CFTC at ETHDenver extends and upgrades the regulatory coordination path established over the past year. The focus of regulation is shifting from post-facto accountability and vague deterrence to preemptive collaboration and predefined boundaries, which not only changes market expectations regarding regulatory pace but also reshapes developers' mental anchors when designing products and contracts.
A New Game Board for Joint Regulation
● Why the Investment Contract Determination Framework is the Focus: The SEC has clearly stated its plan to release the crypto asset "investment contract" determination framework in the coming "weeks to months," which has become the focal point for market trading and project discussions. The reason is that once the framework is implemented, it will directly affect whether many tokens are regarded as securities, subsequently requiring stricter information disclosure, registration, and compliance obligations. For assets still in the gray area, this amounts to a concentrated "identity verification," determining their ability to exist in mainstream trading venues and attract compliant funds over the long term.
● Regulatory Stance: Emphasizing Disclosure Rather than Endorsement: According to the public stance on the SEC official website, regulators repeatedly emphasize their responsibility is information disclosure and rule clarity, not to provide any form of endorsement or safety net for crypto asset price fluctuations. This means that even if the "investment contract" framework brings short-term favorable expectations, the SEC will not be responsible for asset prices; rather, it will reinforce the obligations of project parties and issuers regarding information disclosure, urging market participants to make decisions based on publicly available information rather than expecting policy signals themselves to serve as a safety clause.
● Layered Path for Securities and Commodity Attributes: Collaboration with the CFTC sends a clear signal—crypto assets with securities attributes and those with commodity attributes may pursue a differentiated regulatory path. The former must comply with rules for securities issuance, trading, and ongoing disclosures, while the latter falls more into the commodity and derivatives regulatory framework. This layering provides "space to escape the securities definition" for some public chain assets and infrastructure tokens, as well as clearer compliance pathways for tokenized securities and traditional financial assets on the blockchain.
● Information Pending Verification and Cautious Citation: It is worth emphasizing that, surrounding ETHDenver, some rumors regarding arrangements such as wallet interface exemptions are still in a pending verification state, and related details have yet to be authoritatively finalized; some of Hester Peirce's on-site remarks have also not been fully recorded in official documents. For this content, it can only currently be marked in reports as "to be verified" or "rumored" to avoid conflating unverified technical details with the formal regulatory framework.
Innovation Exemption Window and DeFi Stress Testing
● The Outline of Innovation Exemption: The so-called "innovation exemption" appears to provide a restricted, retrievable pilot space for tokenized securities and related products based on publicly available information. Within this space, specific projects can conveniently launch, circulate, and iterate within a certain time frame and scale, provided they accept additional disclosure requirements and risk warnings and are subject to the possibility of being halted, adjusted, or completely revoked at any time. This type of "conditional opening" does not mean the abandonment of regulation but rather confines high-risk innovations within a controllable radius.
● DeFi Experiment from the Perspective of Regulatory Sandboxes: From the perspective of regulatory sandboxes, DeFi protocols and tokenized assets are expected to conduct scaled, limited compliance model testing under the "innovation exemption." For example, some lending or derivative agreements could explore how to embed KYC, information disclosure, and risk grading within the exemption framework while retaining certain degrees of openness and combinability. For developers, this is both a stress test and a survival exam: protocols must demonstrate their feasibility under compliance models to move out of the sandbox and gain access to larger market space.
● Returning from Speculation Narrative to Product Value: SEC officials emphasized in public statements that "true value should come from products with real utility, not betting on regulatory favors." Combined with the innovation exemption mechanism, this attitude actually sends a pressure signal to the market: tokens that only tell stories around "expectations of regulatory easing" will find it harder to pass exemption reviews and continuous disclosure tests; conversely, protocols and assets that can demonstrate clear use cases, genuine demand, and quantifiable utility will have better opportunities to stand firm in the sandbox, pushing the crypto market back from pure narrative competition to competition based on products and services themselves.
● Unknown Boundaries and Market Suspense: Currently, key parameters concerning the boundary setting, pilot scale, and exit mechanisms of the exemptions have not been disclosed by the authorities and are explicitly listed as missing details in the research briefs. These variables will directly determine the intensity of market competition: the broader the boundaries and the larger the scale, the more likely it is to provoke fierce capital inflows and risk accumulation in the short term; conversely, if the exemption space tightens, project parties may be forced to quickly present sustainable business models. For DeFi and tokenized projects seeking compliance, these unknowns will be the most critical regulatory details to track in the coming months.
Regulatory Certainty Trading with Price Leading Bets
● Overlap of Bitcoin and Regulatory Signals: Within the same time window of releasing signals for Project Crypto and innovation exemptions, Bitcoin price broke through the $67,000 mark. Although a simple causal relationship cannot be drawn, the temporal overlap has led many market participants to see it as a manifestation of "regulatory certainty premium"—that is, even if regulation turns tighter, as long as the rules are clearer, institutions and long-term capital are more willing to increase their allocations to crypto assets rather than continue to wait in the gray area.
● Liquidity Injection and Recovery of Risk Appetite: Research briefs indicate that the Federal Reserve injected about $18.5 billion in liquidity this week (from a single source), providing additional ammunition for global risk assets. Coupled with the performance of U.S. tech stocks and an overall stabilization in risk assets, this liquidity increment together with the regulatory coordination signal forms the macro backdrop for the warming sentiment in the crypto market. For some funds, regulation is no longer viewed as a one-way negative but as a core variable to reassess the risk-return ratio of crypto assets when liquidity is favorable.
● Price Increase Does Not Mean Bottoming Commitment: It’s important to remain calm; the price upward movement under regulatory expectations and liquidity resonance does not represent any form of "official floor." Regulatory agencies have repeatedly emphasized that they will not be responsible for prices but will focus on disclosure and rules. For traders, the rise in such an environment feels more like a high-volatility amplifier: when favorable, funds quickly chase prices under certainty; once expectations fall short or details tighten, selling pressure can similarly be concentrated and released. The current price trend is more appropriate to be understood as an early pricing of the future framework rather than a signal of having gained a safety net.
Narrative Puzzle: The Convergence of Prediction Markets and the Compliance World
● The Integration Case of Polymarket and Substack: The research brief mentions that the collaboration between the prediction market platform Polymarket and the content platform Substack provides a new paradigm for "content + price expectation." Content creators can output analyses around macro events, policy directions, and industry trends, while users price different outcomes on the prediction market with real funds, forming a closed loop of information and trading. This fusion of narrative and betting enables the crypto world to react more quickly to policy and regulatory details, with a more pronounced amplifying effect.
● Policy Expectation Game Strengthened Under Information Disclosure: In the context of increasingly clear regulation and significantly enhanced information disclosure, prediction markets are expected to become a focal point for policy expectation games. When the SEC and CFTC release phase documents, discussion drafts, or pilot lists regarding Project Crypto, relevant events can quickly be structured into tradable contracts in the prediction market, with price changes providing feedback to content platforms and community discussions, creating a higher frequency of interaction between regulatory tempo and market sentiment.
● New Frictions Under the Project Crypto Framework: Once Project Crypto institutionalizes the definitions of investment contracts, innovation exemptions, and information disclosure requirements, new frictions are almost certain to arise between on-chain prediction contracts, governance voting, and future compliance requirements. For example: will certain prediction contracts on regulatory outcomes be viewed as alternative channels for evading information disclosure obligations? In governance votes involving undisclosed compliance negotiation information, do these touch upon the gray line of undisclosed material information? These questions currently have no answers but will all represent structural issues that must be faced in future compliance narratives.
The Regulatory Script is Not Finished: The Long-term Tug of War between Innovation and Red Lines
The signals conveyed from ETHDenver show that from SEC-CFTC regulatory coordination to the concept of innovation exemption sandbox, the SEC is attempting to transition from a past focus on "post-facto enforcement" to a policy path of "drawing lines in advance and setting tracks." Regulation is no longer just about holding projects accountable after they have grown but is attempting to define from the start which structures are more likely to be tolerated and which boundaries, once touched, are almost certain to be cleaned up.
In the short term, market trading will likely continue to revolve around the details of investment contract determinations, the boundaries of innovation exemptions, and participation conditions, with funds being pulled back and forth between "expectations of easing" and "tightening of details." However, from a longer time perspective, the real winners will not be the speculative funds that short-term speculate on the rhythm of regulatory sentiment but those applications and protocols that can still prove their value in a high-pressure compliance environment and survive the complete regulatory cycle.
In the coming months, the specific path of Project Crypto, the formal definition of crypto "investment contracts," and the first batch of projects entering the innovation exemption pilot list will be three key windows for observing the direction of the crypto market. For developers, this is a collective experiment forced to connect with the traditional compliance world; for investors, it is a long-term new gamble of continuously redrawing the battlefield between red lines and innovation.
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