What Should Crypto Market Rules Require? Our Comments to the SEC, CFTC and FCA

The rules for crypto markets in the US and UK are being written and finalised now. In October 2026, our co-founder Sushant Kumar submitted formal comments on four of them:

• SEC, proposed Regulation Crypto Assets (File No. S7-2026-27)
• SEC, Innovation Exemption order for tokenized securities venues (File No. 4-927)
• CFTC, Advance Notice of Proposed Rulemaking on Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets (RIN 3038-AF80)
• FCA, GC26/7 guidance consultation on decentralised finance

Each one draws on what we see running market making and market surveillance for token issuers. This page sets out what we recommended, the evidence behind it, and where each consultation stands.

Why is a market maker commenting on crypto regulation?

Market makers sit between issuers, exchanges and traders, so we see where crypto markets break before most people do. We see volume that the order book could not have absorbed, token supply that does not match what was disclosed, and trading between wallets that clearly belong to the same person.

Rules written without that view tend to regulate what gets reported rather than what actually happens. Our comments try to close that gap with specific, workable recommendations. Each letter also discloses our own commercial interests, since we provide market making and surveillance services in the markets these rules cover.

Is reported trading volume evidence of liquidity?

No. Volume tells you how much traded. It does not tell you whether a buyer or seller of meaningful size could trade without moving the price, and that is what liquidity means to anyone actually using a market.

In our surveillance work we have seen venues report daily volume that the visible order book could not have absorbed, and order books that appear to copy another venue's book rather than reflect independent liquidity. A common driver is compensation tied to volume. When a listing agreement or a market making contract pays for traded volume, it pays for exactly the activity that is easiest to fake.

What we recommended:

• Surveillance should test order book depth and trade quality, not just volume.
• Venues should publish a periodic depth measure, such as the size available within set percentages of the price.
• Daily volume should be published per venue in a common format, so it can be compared across unaffiliated venues.
• Any compensation linked to traded volume, in listing or market making agreements, should be disclosed.

Should token supply and vesting be verifiable on-chain?

Where they already live on-chain, yes. The SEC's proposed Rule 103 asks issuers to disclose total supply, allocations, lockups and vesting, and who controls minting, upgrades and pausing. Almost all of that can be checked directly on-chain, but only if the issuer says where to look.

Before writing our comment, we reviewed 13 widely held tokens. Four published allocation figures specific enough to compare against chain state. None published the addresses or contracts holding the team, investor or founder allocations. Without those, a stated vesting schedule cannot be confirmed by anyone outside the issuer.

What we recommended:

• For each allocation category, the issuer should identify the holding addresses or smart contracts, or state that it cannot and why.
• The issuer should identify the addresses holding mint, upgrade, pause or admin roles.
• The transition report supporting the Rule 400 safe harbor should include on-chain facts that third parties can check, such as whether privileged roles still sit with the issuer and whether disclosed lockups have expired.
• Market making arrangements should be expressly covered as material agreements, with a summary of the counterparty type, the size of any token loan, and the strike and term of any call options. Detailed commercial terms can stay confidential.

What happens to tokenized stocks when the stock market is closed?

The token keeps trading and the stock does not. The IMF's October 2026 Global Financial Stability Report found that more than half of trading in the tokenized stocks it studied happened outside regular US market hours, with volatility around 1.5 times that of the underlying stock.

That creates a gap problem. An automated pool prices from its own reserves, with no reference to the national best bid and offer, and a liquidity provider cannot cleanly hedge a single stock while its primary market is closed. Whatever the token price drifts to over a weekend, it has to reconcile with the real opening price on Monday, and someone absorbs that difference.

Our comment on the SEC's Innovation Exemption recommended:

• Venues should publish, for each stock, the difference between the last pool price before the primary market opens and the opening price.
• Venues should describe how they price and protect pools while the underlying is closed, including any oracle, price band or dynamic fee.
• Liquidity providers' capital should be assessed against a gap at the reopen, where their losses are most likely to concentrate.

What should DeFi market monitoring cover?

Two things that are easy to see on-chain and still often go unchecked: who controls a liquidity pool, and whether trades are happening between wallets controlled by the same party.

Control of a pool is visible before anyone buys. If a small number of linked wallets supply most of the liquidity, they can pull it, and buyers deserve to know that. Wash trading between linked wallets shows up in the transaction history, and permissioning a venue does not prevent it, because one person can control many wallets.

Our comments to the FCA on GC26/7 covered liquidity provider concentration and detection of wash trading between linked wallets. In our SEC comment on tokenized securities venues, we recommended that monitoring for self-trading and trading between linked wallets be a condition of operating, rather than something a venue can disclose it does not do.

Why is crypto well placed to be regulated well?

Because so much of what a regulator wants to see is already public. Token supply, vesting contracts, admin keys, wallet activity and pool ownership are recorded on-chain and timestamped, and order book depth can be tested directly. Traditional markets spend heavily on reporting systems to produce a fraction of that.

Tokenization is bringing traditional capital on-chain, and that capital will expect the standards it gets in regulated markets. The opportunity is rules that require crypto markets to use what the chain already provides, and that are practical enough for honest projects to meet. That is the market we are working toward at Vandergrid: transparent, fair, and something institutions and ordinary investors can trust with real capital.

Where do these consultations stand?

Two of the four are still open for comment, and every published comment is linked below.

• SEC Regulation Crypto Assets (S7-2026-27): proposed rule. Our comment is published on the SEC comment file.
• SEC Innovation Exemption (4-927): a temporary conditional exemptive order, which the SEC describes as a bridge to rulemaking. Our comment is published.
• CFTC crypto markets ANPRM (RIN 3038-AF80): open for comment until 14 December 2026. Our comment is published on Regulations.gov.
• FCA GC26/7, DeFi guidance: open until 18 November 2026. The FCA does not publish individual responses. The consultation is here.

If you run markets, issue tokens or provide liquidity, the two open consultations are worth responding to. Comments grounded in what actually happens in markets are the ones that shape the final rules.

This article summarises public comment letters. It is not legal or investment advice.