In mid-May 2026, the U.S. Securities and Exchange Commission (SEC) sent out three seemingly scattered but actually aligned signals in the crypto asset space: the Chair announced a call for public comments on "prediction market ETFs," attempting to assess the risks and operational methods of this product, seen as "essentially a completely new product form," before making any substantial decisions; almost simultaneously, Defiance ETFs submitted a money market ETF application to the SEC designed according to the qualified reserve asset requirements of the GENIUS Act. Bloomberg analyst James Seyffart publicly pointed out that the product is aimed at the reserve demand of payment-type stablecoin issuers managed under the GENIUS framework, and this act has more stringent requirements for the safety and liquidity of reserve assets than traditional money market funds; at the same time, crypto journalist Eleanor Terrett revealed that Hester Peirce, a commissioner who has long served as the head of the SEC's crypto working group, plans to teach at Regent University School of Law in Virginia in November. This figure, known as the "crypto mom," leaving the front lines of Washington regulation is interpreted by the market as a signal that her term is nearing its end and the succession route is unclear. These three events occurring within the same time frame place the SEC at a very clear crossroads: on one side are functional innovations represented by prediction market ETFs and native public chain assets, and on the other is prudent regulation represented by the GENIUS Act's reserve framework. Coupled with the uncertainty brought about by the potential departure of key figures in the "crypto-friendly faction," the tolerance and boundaries of U.S. securities regulation in the crypto direction are facing redefinition. For prediction market platforms, this round of consultations will directly impact whether they are allowed to enter the compliant capital markets through ETF shells; for payment-type stablecoin issuers, if the money market ETF under the GENIUS Act framework is approved, it will reshape their reserve asset allocation and cost structure; for all institutional and individual investors participating in the U.S. market, these three simultaneous triggers point to a core question: in the coming years, will they face a more open shelf of crypto financial products, or a higher threshold with stronger constraints of compliance fences.

Prediction Market ETFs on the Table: SEC Asks the Public

In this announcement personally signed by the Chair in mid-May, "prediction market ETFs" were officially written into the SEC's discourse for the first time. Bloomberg ETF analyst Eric Balchunas promptly released the document on social media, specifically noting that this is "essentially a completely new product form" because it superficially has the shell of a traditional fund, but its core is closer to an on-chain prediction market—investors are not simply buying exposure to an asset price increase, but are using shares to bet on the outcomes of real-world events. This creates a natural mapping relationship with existing on-chain and centralized prediction products in the crypto space: both are priced based on "event outcomes," can be traded in token or contract form, yet attempt to fit into the regulated securities channel constrained by 1940s frameworks, making it difficult to simply categorize as an extension of "crypto derivatives" or "traditional index ETFs."

More importantly, the SEC's current action chooses to openly solicit comments, rather than directly providing approval or denial as in the past. As of May 21, the public sees neither the names of specific applicants, nor product structures, fees, or even review timelines; they can only infer regulatory thinking from the "first collect market feedback" stance: the Chair throws the question back to the industry, allowing asset managers, scholars, and compliance teams to self-expose risks and operational modes in comment letters, and then deciding whether to draw red lines for the next steps. For platforms that already operate on-chain or centralized prediction markets, this means a potential "mirror": once the SEC defines the boundaries for ETF versions of prediction products, the differences between gray area products and compliant products will be amplified; issuers of related tokens and market-making institutions must also preemptively consider whether the event contracts and liquidity incentives they provide will be seen as "sampling" for future ETFs, thus being subject to stricter disclosure and suitability obligations; and if traditional brokerages and investment advisors are ultimately allowed to sell such ETFs, the entire set of clauses in their internal compliance manuals regarding "gambling and speculative structured products" will likely need to be rewritten to address this hybrid that resembles crypto yet is packaged in an ETF shell.

GENIUS Act and Defiance Reserve ETF

Unlike the tentative exploration of the new structure of prediction market ETFs, the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), submitted at the same time, targets an old problem: "where exactly to keep the money" for payment-type on-chain dollar assets. The Act directly establishes a federal regulatory framework for reserves of related issuing entities, limiting the permissible assets to those with extremely high security and liquidity, with its tolerance for duration and credit risk being noticeably tighter than traditional money market fund regulatory standards, effectively nailing the "right side of these issuers' balance sheets" into the most conservative corner.

Defiance ETFs' application for a money market ETF under this framework acts as a ready-made "container" for the Act: this ETF only invests in the qualified reserve assets defined by the GENIUS Act. Bloomberg ETF analyst James Seyffart publicly interprets this as a reserve allocation tool specifically designed for issuers of these payment-type tokens. There is currently no news on approval status, but just from the structure, it packs the regulatory red line and asset pool into a listed product: if issuers choose to deposit their reserves directly into this ETF, the compliance narrative will be cleaner, at the cost of having the freedom of fund use locked into ultra-high liquidity assets, pushing yields down close to the "regulatory lower limit," while also taking on additional management fees and information disclosure obligations at the ETF level; once this path is established, traditional money market funds may gradually lose their role in institutional payments and on-chain dollar settlement funds to such "drier, harder, and more regulated" new reserve tools.

Crypto Mom Turns to Leave: SEC Loses Internal Ally

At the critical moment when prediction market ETFs and GENIUS Act framework products are both on the table, that one commissioner within the SEC who dares to "write love letters" for crypto products has chosen to set her next stop in academia. Hester Peirce, who has long been the head of the SEC's crypto working group, is referred to as "crypto mom" in the industry due to her frequent pleas for crypto innovation in enforcement statements and public speeches. Unlike her colleagues' usual cautious or even rigid tone, she prefers to view on-chain experiments as financial innovations that can be regulated and piloted, rather than sources of risk that need to be suppressed entirely. In mid-May 2026, crypto journalist Eleanor Terrett revealed that Peirce would go to Regent University School of Law in Virginia as an associate professor in November, where she will teach courses related to securities regulation, digital assets, and public policy, which is widely interpreted as a strong signal that her term at the SEC is nearing its end.

For an institution that relies on commissioner votes to give new products "life or death signatures," losing one relatively friendly voice means the internal power structures are rewritten. The timing of Peirce's departure and the announcement of her successor have not yet been made public. In the short term, she remains formally a participant in discussions on prediction market ETFs, ETFs under the GENIUS Act, and other topics; however, the market is already pricing in a "SEC without crypto mom": in future votes on crypto products, her support or opposition may become a swan song, and whether her successor continues a tolerant attitude or reverts to zero tolerance will directly determine whether crypto-related ETFs and on-chain payment tools can continue to find institutional gaps within the SEC framework. This quiet personnel change may reshape the SEC's tolerance boundaries for crypto products in the coming years more profoundly than any public comment document.

Dual-Track Regulation Formed: Exploring New Products While Tightening Boundaries

At the same time that the "crypto mom" is preparing for her exit, the SEC has provided a roadmap for the next phase: one path maintains openness to new species, while the other tightens risks through more detailed regulations. The former is reflected in the Chair's public solicitation of comments on prediction market ETFs—not a blanket rejection, but first allowing the market to lay out the risk points and usage scenarios of this "essentially a completely new product form" on the table, leaving room for future choices on whether to permit piloting, impose strict suitability limits, or directly shut it down. The latter falls under the federal compliance track of the GENIUS Act: it designs a regulatory framework for the reserves of token issuers aimed at payments, but with stricter safety and liquidity requirements than traditional money market funds, raising the threshold for stepping onto this track. Defiance ETFs was the first to file for a money market ETF under this framework, attempting to package "GENIUS qualified reserve assets" into a standardized tool, ostensibly providing issuers with a plug-and-play reserve solution, but in essence, it is also helping regulators lock down the forms of funding pools and asset durations.

Under this dual track, participants' pressures are no longer just about "whether they can launch products," but about "how to modify business structures." Prediction market platforms and comprehensive exchanges, if they hope to reach compliant U.S. funds through prediction market ETFs in the future, must preemptively draw the boundaries between securities and non-securities across business lines and reserve interfaces for cooperation with licensed brokers and proprietary firms, rather than relying on the old logic of a "unified global entry" at the front end. For token issuers facing payment scenarios, they face the choice of either stepping onto the GENIUS reserve track, accepting extremely high liquidity assets, centralized custody, and disclosure constraints, or choosing to remain outside federal regulation, bearing higher compliance uncertainty. Both paths will reshape profit models and funding efficiency. Custody institutions and market makers will also need to rewrite balance sheets: once a GENIUS-based reserve ETF is approved, liquidity and collaterals may be absorbed into just a few "regulator-recognized" money pools, while the parallel patterns among securities, payments, and banking regulations in the U.S. may create friction for these new tools under different regulatory interpretations, forcing the entire industry to make more nuanced trade-offs between "using new products to meet demand" and "rearranging business around existing asset and licensing boundaries."

Who Draws the Line Next: Regulatory Gamble between Platforms and Issuers

Returning to the initial three lines: the prediction market ETFs currently in the public comment phase, the reserve ETF application based on the GENIUS Act, and the signal of Hester Peirce's imminent departure collectively outline an uncolored boundary sketch—the SEC is simultaneously asking how the market views this "essentially a completely new product form," while holding the ruler of the GENIUS Act to measure the reserve pools of payment-type businesses, all while facing the fundamental question of who will take over the crypto working group after "crypto mom." In the short term, the key observation points will focus on three directions: whether public opinion on prediction market ETFs pushes the discussion towards "cautious approval" or "principled rejection"; how the supporting details of the GENIUS Act will be implemented, and whether Defiance's reserve ETF will be included or kept out; whether Peirce's successor will continue a relatively open attitude towards innovation or push crypto-related ETFs back into a more traditional regulatory framework. For trading platforms, payment-oriented issuers, and cross-border institutional investors, every exploration by the U.S. in crypto assets, payments, and capital markets often spills over through market structure and licensing logic; currently, it is necessary to preemptively rehearse compliance and business restructuring under different regulatory paths, but the real timeline and boundaries of the final outcome will still depend on the direction of these three lines in future rounds of gaming.

Join our community to discuss and become stronger together!
Official Telegram community: https://t.me/aicoincn
AiCoin Chinese Twitter: https://x.com/AiCoinzh
OKX Benefits Group: https://aicoin.com/link/chat?cid=l61eM4owQ
Binance Benefits Group: https://aicoin.com/link/chat?cid=ynr7d1P6Z

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。