The Avalanche Policy Coalition suggests that U.S. regulators can effectively bring crypto spot markets under supervision by extending existing rules to new instruments, rather than creating an entirely new framework.
New year, new approach: how the SEC and CFTC can modernize crypto market structure. Our proposal: act now using existing exemptive and rule-making authority to create robust, competitive crypto markets in the US. 🧵 pic.twitter.com/fM0eaohUPL
— Avalanche Policy Coalition 🔺 (@AvalanchePolicy) January 13, 2026
In a recent interview with TheStreet Roundtable, Lee Schneider, General Counsel at Ava Labs, detailed the coalition’s proposal. The core of this proposal involves empowering the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to authorize already regulated intermediaries to trade spot crypto.
“Crypto is different, in a lot of ways, from existing financial instruments, but it’s still an instrument that trades electronically, settles electronically, and fits into a framework that regulators and market participants already understand,” Schneider stated.
Integrating Crypto into Modern Markets
Modern financial markets are already characterized by electronic operations across various asset classes.
“Companies have a lot of experience with this,” Schneider explained. “Regulated intermediaries have a lot of experience with electronic trading, custody, settlement, surveillance, and risk management. None of that is new just because the underlying asset happens to be crypto.”
The coalition's proposal is structured in two phases. The initial stage focuses on exemptive relief. Under this approach, the SEC and CFTC would permit regulated entities to commence spot crypto trading after they certify that appropriate safeguards are in place.
“You now have exemptive relief,” Schneider said. “If you want to start trading this stuff, you have to file a certification with us telling us that you’re doing it, what policies and procedures you have, and how you’re going to protect customers.”
During this transitional period, firms would remain subject to regulatory examinations. This phase would allow regulators to observe the functioning of crypto trading within existing market infrastructure before formal rules are finalized.
Adapting Current Market Rules to Crypto's Specific Needs
The second stage involves formal rulemaking. Schneider indicated that these rules should acknowledge both the distinctions and the commonalities between crypto assets and traditional securities or commodities.
“Do some rulemakings,” he advised. “Propose rules, take comments, and have those rules take account of some of the differences in the way that blockchain and crypto work, while also understanding the similarities in how electronic trading works today.”
A central theme of the proposal is regulatory adaptability. Schneider emphasized that markets are constantly evolving, and the regulatory system has historically adapted alongside them.
“There’s this adaptability built into the system,” he remarked. “That’s how we regulated new products before, and there’s no reason it can’t work here as well.”
The coalition's stance is that crypto does not require an entirely new regulatory regime. Instead, it needs to be integrated into the existing one.