Crypto’s next phase may hinge on resisting short-term trading pivots and fixing regulatory fog, as a16z leaders warn that durable products and clear U.S. rules will decide which blockchain businesses survive and scale.
Trading Dominates Crypto Today — But the Smart Money Is Positioning for What’s Next
A forward-looking debate has emerged around crypto business models and regulation. A16z crypto general partner Arianna Simpson and crypto policy general counsel Miles Jennings shared on social media platform X on Jan. 12, outlining lessons for builders in 2026 that focus on durability, incentives, and regulatory clarity.
Simpson examined a growing pattern among crypto startups, where companies that gain traction increasingly pivot toward trading as a primary business line. She described how this shift is often driven by short-term revenue pressure and the perception of fast product-market fit, especially outside of stablecoins and core infrastructure. Simpson argued that when many firms pursue the same trading-heavy strategy, competition intensifies, differentiation erodes, and long-term defensibility weakens. Against that backdrop, she stated: “There’s nothing wrong with trading — it’s an important market function — but it doesn’t have to be the final destination.”
She expanded on how crypto’s speculative dynamics and token incentives can pull founders toward immediate gratification at the expense of durable product development, likening the challenge to a marshmallow test. While acknowledging the financial strain many teams face, she stressed that premature pivots carry hidden costs and concluded that patience around core offerings matters, adding:
“The founders who focus on the ‘product’ part of product-market fit may end up the bigger winners.”
Read more: Charts Don’t Lie: Bitcoin’s Next Move Could Rewrite the Crypto Playbook
Jennings focused on the structural effects of regulation on blockchain development in the U.S., describing how prolonged legal uncertainty distorted incentives across the industry. He outlined how securities laws applied unevenly to networks pushed founders to prioritize legal risk mitigation over product strategy, sidelining engineers and shaping designs around compliance rather than functionality. Jennings explained: “ Crypto market structure regulation — which the government is closer to passing this year than it’s ever been — has the potential to eliminate all of these distortions.”
He detailed consequences that included reduced transparency, arbitrary token distributions, theatrical governance, and organizational complexity optimized for legal cover. By contrast, he described how clearer rules could reward openness, standardize token launches, and replace enforcement-driven outcomes with predictable processes. Pointing to the impact of recent stablecoin legislation, Jennings framed broader market structure reform as transformative for networks, concluding:
“Such regulation would enable blockchain networks to operate like networks — open, autonomous, composable, credibly neutral, and decentralized.”
FAQ ⏰
- Why are crypto startups pivoting toward trading business models?
Short-term revenue pressure and perceived fast product-market fit are pushing many teams toward trading-heavy strategies. - What risks did Arianna Simpson highlight about trading-focused crypto startups?
She warned that competition, weak differentiation, and reduced long-term defensibility often follow trading-first pivots. - How has U.S. regulation distorted blockchain development, according to Miles Jennings?
Legal uncertainty forced founders to design around compliance instead of functionality and product strategy. - What could crypto market structure regulation change for blockchain networks?
Clear rules could standardize token launches and allow networks to operate openly, autonomously, and predictably.