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Financial regulation has always looked to capture intermediaries, the money transmitters, brokers, exchanges, custodians, and others that move, hold or control assets on behalf of end users. In traditional financial services, that boundary is relatively clear: regulation attaches to those who intermediate transactions, control client assets, or provide financial services. It does not attach to the wider infrastructure that supports those activities. As digital asset ecosystems become more complex, that same boundary is being tested in new ways, making it important to defend the underlying principle. This piece examines how the EU’s implementation of the Travel Rule (via the recast Funds Transfer Regulation or “TFR”) correctly draws that line using the concept of “ancillary infrastructure,” and how a similar distinction appears in the U.S. GENIUS Act. At its core, the analysis is simple but consequential: when does a participant in a crypto system become a regulated intermediary, and when are they merely part of the infrastructure that makes the system work? These two pieces of legislation on both sides of the Atlantic show how policy makers can ensure regulation remains in force for the activities they want to capture, without blurring the distinction between infrastructure providers and financial intermediaries. In the EU: Where the Concept Comes From The EU’s idea of ancillary infrastructure appears in the recitals of the TFR, which guide how the regulation should be interpreted. The regulation explains (emphasis added): Persons that provide only ancillary infrastructure, such as internet network and infrastructure service providers, cloud service providers or software developers, that enable another entity to provide transfer services for crypto-assets, should not fall within the scope of the Regulation unless they perform transfers of crypto-assets. That is the entirety of it. The term is not further defined. There is no formal category or test in the operative provisions of the TFR, just this functional description and a few examples. But that short passage does a lot of good work. A Working Definition Taking the recital’s examples and its express limit together, ancillary infrastructure can be more specifically understood as: Infrastructure that is used by others in connection with crypto-asset transfers, but does not itself effect, execute, or control the transfer of crypto-assets, or provide custody of such assets. This is not a technology-based definition. It is a role-based definition, grounded in the regulatory perimeter. (This is consistent with other EU Regulations in the crypto-space, such as the Markets in Crypto-Assets (MiCA) Regulation.) What matters is not what the system looks like, but what the activity actually is. Two elements define the boundary: 1. Used in Connection with Transfers The infrastructure is part of the ecosystem that enables crypto-asset transfers. It may be essential to the functioning of the system. It may sit directly in the transaction flow. But it operates in a supporting role to the financial transaction, and is used by other entities such as CASPs and end users. 2. No Transfer or Custody Function The infrastructure provider does not: effect or execute transfers, control the movement of crypto-assets, or provide custody or control over those assets. That is the dividing line. Once a provider crosses into movement or control of value, it begins to look like an intermediary. If it does not, it remains infrastructure. What Counts as Ancillary Infrastructure The TFR itself provides only a handful of examples, but they point to a broader and consistent categorization. They are infrastructures that enable the system to function, without themselves engaging in the activities of financial intermediation. Internet Network Providers, such as internet service providers and network connectivity providers. These entities move data, not value. They carry transaction information across networks, but they have no relationship to the underlying assets being transferred or parties making the transfers. Cloud Service Providers, such as infrastructure-as-a-service providers and cloud hosting platforms. These providers supply computing power, storage, and hosting. They make it possible to run nodes, exchanges, and applications, but do not execute transfers, hold assets or interact directly with customers. Software Developers, such as developers of non-custodial wallets, developers of blockchain protocols, and providers of APIs and developer tools. These actors create the tools that others use to interact with crypto-assets. Once deployed, they do not control how those tools are used, nor do they execute or custody transactions. Technical Infrastructure Providers, such as node infrastructure providers, remote node access (RPC) providers, blockchain data indexing services, and validators and miners. These entities maintain and operate the underlying networks. They validate transactions, order and record them according to protocol rules, and ensure the system continues to function. They do not act on behalf of users, determine the purpose of transactions, or take custody of assets. Their role is protocol-level infrastructure and maintenance, not financial intermediation. Data and Analytics Providers, such as blockchain analytics firms, transaction monitoring tools, and risk scoring services. These providers analyze and interpret blockchain data. They support compliance, investigation, and risk management, but they do not initiate, execute, or control transfers. As we see, the concept of ancillary infrastructure covers a lot of different providers and activities, none of which intermediates or has direct responsibility for transfers or custody. This recognition provides a critical distinction between who is and who is not subject to regulation. A Parallel Approach: The GENIUS Act The same boundary appears explicitly in the U.S. GENIUS Act, which introduces the concept of a Digital Asset Service Provider (DASP) and provides exceptions for infrastructure providers. The Act defines DASPs by reference to familiar intermediary activities: exchanging digital assets, transferring them to third parties, acting as custodians, and providing financial services tied to issuance. In other words, DASPs are intermediaries. But the definition goes further by explicitly stating what is not an intermediary. The definition of DASP explicitly excludes: a distributed ledger protocol; developing, operating, or engaging in the business of developing distributed ledger protocols or self-custodial software interfaces; an immutable and self-custodial software interface; developing, operating, or engaging in the business of validating transactions or operating a distributed ledger; or participating in a liquidity pool or other similar mechanism for the provisioning of liquidity for peer-to-peer transactions. This is the same idea as ancillary infrastructure in the TFR, but stated directly in the text (rather than the recitals), and in greater detail. The Same Line, Two Drafting Styles The TFR and the GENIUS Act take different drafting approaches, but they arrive at the same place. The TFR uses a functional exclusion (“ancillary infrastructure”) The GENIUS Act uses explicit statutory carve-outs Both frameworks draw the same distinction: Intermediaries are regulated because they effect or execute transactions, or control or custody assets - activities that are traditionally within the regulatory perimeter. Infrastructure providers are not, because they enable systems rather than effect transactions or custody assets - activities that have never been captured within the regulatory perimeter, although firms using the infrastructure to undertake regulated activities may themselves require regulatory authorization. In both, that principle holds across network providers, software developers, validators and miners, and other technical actors. Conclusion: Why This Distinction Matters This boundary is not just a drafting detail, it continues to apply a foundational principle. Crypto systems are built in layers. Many actors contribute to how transactions are created, transmitted, and recorded. Without a clear distinction, regulation could easily expand to capture the entire stack. The concept of ancillary infrastructure prevents that outcome. It ensures that providing infrastructure, which is neutral and only indirectly involved, is not treated the same as acting as an intermediary in transactions. That principle is now reflected on both sides of the Atlantic. As digital asset markets evolve, it is likely to remain one of the most important lines in crypto regulation. And together these two pieces of legislation show how policy makers can update rulebooks for new technologies without unwittingly regulating the technology itself. We at Avalanche Policy Coalition have discussed this point multiple times over the last year, including in our April and May comment letters to the SEC Crypto Task Force, our response to the Australian Treasury consultation, and this blog post. Preserving the distinction between infrastructure and intermediary is one of our 2026 policy priorities.

Introduction On March 17, 2026, the U.S. Securities and Exchange Commission (SEC), together with the Commodity Futures Trading Commission (CFTC), issued its most comprehensive statement to date on how federal securities laws apply to crypto assets. The Interpretation represents a significant step in clarifying how regulators view token classification, interpret “investment contract”, and categorize core blockchain activities. Of course, we were very pleased that the agencies classify AVAX as a digital commodity and not a security in the Interpretation. But there is much more to dig into. Over the past year, Avalanche Policy Coalition (APC) has advanced a framework for crypto regulation centered on three principles: (1) the nature of the asset matters, (2) infrastructure and intermediaries must be treated differently, and (3) regulation should be workable and grounded in real market structure. Our April, May and September 2025 comment letters to the SEC Crypto Task Force articulated these ideas in detail. This post compares the SEC Interpretation with that framework, highlighting where they align, where they differ, and how the two approaches relate conceptually. Token Classification: Converging on Function One of the most important developments in the SEC Interpretation is the introduction of a five-part taxonomy for crypto assets: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. This approach aligns closely with APC’s long-standing emphasis on token classification based on function, which we call the nature of the asset test and is grounded in the functions and features of the token rather than how it is marketed or what it is called. APC has described “protocol tokens” as a distinct category of assets integral to the functioning of blockchain networks. The SEC’s category “digital commodities” captures much of this same concept. These assets derive value from the programmatic operation of a functional crypto system and supply-and-demand dynamics, rather than from the expectation of profits based on managerial efforts. The SEC definition of digital commodity as part of a crypto system emphasizes functionality at both the Layer 1 and application layer, much as APC’s protocol token is agnostic about the layer on which the protocol functions. This is an important recognition that digital commodities may exist at various levels of the tech stack. Also important, the SEC does not opt for a slavish application of a “decentralization” requirement as the deciding factor for the nature of the asset.  Rather, it remains focused on functionality and consumptive use.  This flows as well into its interpretation of “investment contract,” discussed below. The two approaches therefore converge in substance, reflecting a growing consensus around function-based token classification, which we have championed for many years. Both the SEC and APC recognize that tokens such as AVAX, BTC, and ETH do not have the features or functions of securities and should be analyzed accordingly. The difference lies primarily in structure: APC proposed a distinct legal category for protocol tokens, subject to distinct treatment, while the SEC states that digital commodities may fall into the broader world of commodities. Similarly, the SEC addresses stablecoins, particularly those covered by the GENIUS Act and prior staff guidance, finding them to not be securities while noting that other stablecoin arrangements may require further analysis. This reflects its alignment with the nature of the asset test APC articulated, which evaluates tokens based on their specific characteristics and functions. Assets vs. Transactions: A Shared Distinction A central theme of the SEC Interpretation is the explicit distinction between a crypto asset and the transaction in which it is offered or sold. For example, a digital commodity is not itself a security; however, it may be sold pursuant to an investment contract. This is a point of strong alignment with APC’s framework. APC has consistently emphasized that digital assets should not be classified as investment contracts or other types of securities simply because they are involved in activities that look like capital-raising. The SEC Interpretation adopts this principle directly, clarifying that the legal analysis should focus on the contract, transaction, or scheme, rather than the asset itself.  This phrase, taken directly from Howey, has often been overlooked.  The SEC correctly recognizes that it is the lynchpin of how Howey defines investment contract. Oranges simply are not and never will be securities. This brings crypto assets into alignment with other areas of law, where non-security assets (such as commodities or real estate) can be part of securities transactions without themselves becoming securities.  Investment Contract Analysis: Different Approaches One of the main areas of divergence is how to define and apply the concept of an “investment contract.” APC has proposed a framework with clearer boundaries for when securities laws apply. In particular, we encouraged the following definition: “an express agreement between a seller and buyer that provides for the investment of money in a common enterprise with a reasonable expectation of profits solely from the undeniably significant managerial or entrepreneurial efforts of the seller.” This definition starts with the basic articulation from Howey and adds modifications based on prevailing Supreme Court case law and other precedent. By reviving the word “solely” from the original Howey test and requiring an express agreement, this definition provides greater certainty about the “who” and the “what” of the investment contract. The SEC, by contrast, provides guidance on how it will apply the originally articulated version of the Howey test to crypto assets, resulting in less definitive regulatory boundaries. The SEC Interpretation places significant emphasis on issuer representations and promises, including their source, timing, and specificity, in determining whether purchasers have a reasonable expectation of profits from the efforts of others. These concepts reflect a close reading and application of Howey and its progeny, which we agree with. We just wish for something that is easier to apply. Both approaches aim to clarify the same issue, but they differ in methodology. APC emphasizes clearer rules and definitions, while the SEC relies on interpretive guidance within an existing legal framework. Lifecycle and “Separation”: Different Structures, Similar Outcomes APC has proposed a lifecycle-based framework distinguishing between pre-functionality and functional protocol tokens for purposes of determining SEC jurisdiction. Under that approach, protocol tokens sold prior to protocol functionality would be presumed to be the subject of an investment contract, resulting in a securities law framework for their offer and sale.  In contrast, tokens used in a functioning protocol would fall outside the federal securities laws. The SEC does not adopt this structure in full but incorporates elements of it in the Interpretation. Instead, it introduces the concept of “separation” under which a non-security crypto asset can cease to be subject to an investment contract once purchasers no longer reasonably expect the issuer’s essential managerial efforts to remain connected to the asset. This test does not rely solely on “sufficient decentralization” or related concepts, but looks at the overall facts and circumstances to determine whether separation has occurred. While the mechanisms differ, the underlying idea is similar: the regulatory treatment of a token as part of an investment contract or not can change over time as the network evolves and other events occur. APC’s approach uses a more structured lifecycle model, while the SEC relies on a fact-specific analysis tied to issuer activities and market expectations. Infrastructure vs. Intermediaries: Alignment in Core Activities APC has consistently argued that regulation should focus on intermediaries, not infrastructure providers. Validators, node operators, and protocol participants perform technical functions and should not be treated as financial intermediaries. The SEC’s Interpretation reflects this principle in its treatment of specific activities. It concludes that, when conducted as described, the following do not involve securities transactions: Protocol mining Protocol staking Certain wrapping arrangements Certain no-consideration airdrops In each case, the SEC characterizes these activities as administrative or ministerial, rather than managerial or intermediary in nature. Rewards created through staking and delegation are treated as compensation by the network for services performed, not profits derived from the efforts of others. This represents a clear point of convergence. The SEC recognizes that core protocol activities operate at the infrastructure layer and should be treated differently from traditional intermediary services. Token Issuance and Market Structure: Different Levels of Detail APC’s framework includes proposals for a more comprehensive regulatory structure, including tailored approaches to token issuance, disclosures, and the role of intermediaries. The SEC’s Interpretation does not address these areas in detail. It focuses primarily on classification and the application of existing law, rather than introducing new exemptions, disclosure regimes, or intermediary frameworks. Conclusion The SEC’s Interpretation and APC’s framework share a common foundation. Both approaches recognize the importance of functional token classification, the distinction between assets and transactions, and the need to treat infrastructure differently from intermediaries. They also reflect a broader convergence around core securities law principles; particularly, the focus on economic reality, consumptive use, and the distinction between managerial and non-managerial activity. At the same time, they differ in how those principles are implemented. The SEC relies on interpretive guidance within existing legal frameworks, while APC has proposed more structured approaches to classification, lifecycle analysis, and market design. Taken together, the two perspectives reflect an evolving consensus around the core concepts that should guide crypto policy. As regulatory discussions continue, these shared principles provide a foundation for further development of a coherent and workable framework. Avalanche Policy Coalition will continue to engage with policymakers and stakeholders to support thoughtful, functional approaches to crypto regulation.

London Calling Part 2: The UK’s Journey from Roadmap to Reality Eight months ago, we wrote about the UK’s crypto journey being still largely about direction of travel. The legislative perimeter had been sketched out, regulators had published their roadmap, and the ambition to become a global hub for digital assets was firmly back in the political vocabulary. The framework was coming, but for firms on the ground, it still felt a step removed from current reality. That is no longer the case. Since then, the UK has moved from strategy to execution at a pace that is difficult to ignore. The government has now laidthe statutory instrument that brings cryptoasset activities formally into the financial services regime, creating new regulated activities from trading platforms to stablecoin issuance and giving the FCA the legal foundations for a full rulebook. At the same time, the FCA has finalised a core package of consultations covering market structure, admissions and disclosures, market abuse, and a dedicated prudential regime - the operating manual for the future UK crypto market. Add to that the Bank of England’s systemic stablecoin proposals, a new stablecoin-focused regulatory sandbox and sprint, the confirmation of the authorisations gateway timeline, and even primary legislation clarifying that digital assets can attract property rights, the picture becomes clear: the UK is no longer designing a regime in theory. It is building one in real time. Authorisations Approaching The new regime will take effect on October 25, 2027. From 30 September 2026, firms will be able to apply for licences, with a five-month window in which early applicants gain the significant advantage of being able to continue operating while their applications are assessed (even after commencement). But there will be no automatic transition. Every firm, regardless of its current status, will need to pass through the gateway if it wishes to conduct regulated business in the UK. The shift from the MLR framework to FSMA authorisation changes the evidential threshold at the gateway. Applications will need to set out not only what the firm intends to do, but how its governance, risk management, capital planning and operational arrangements will meet the relevant Handbook standards by go-live. Early engagement through the FCA’s specialist crypto authorisations teams and the pre-application support service should help firms interpret those expectations, but authorisation will depend on the credibility and completeness of the proposed operating model not just the timing of the application. For the market, this is the moment when regulatory policy becomes a commercial timetable. From Speed to Calibration For years, the standard critique of the UK was that it was moving too slowly. But that argument no longer passes muster. Few major jurisdictions have attempted to deliver, in parallel, a full conduct regime, a market-structure framework, a prudential rulebook, a systemic stablecoin model, an authorisation gateway and a legislative perimeter, all on a clearly sequenced and short timeline. The UK is now doing exactly that. The question has therefore changed. It is no longer whether the UK can move fast enough. It is whether the regime, once complete, will be calibrated well enough to compete. At Avalanche Policy Coalition, we hope that the calibration will properly take into account a workable token classification system that differentiates financial instruments from other types of assets so that the regulatory perimeter is correctly scoped, as well as preserve the distinction between infrastructure and intermediation. Developers, validators, node operators, and open-source contributors, among others, who do not custody assets or exercise unilateral discretion should not be treated as financial intermediaries. Protecting infrastructure neutrality will support innovation without weakening consumer protection. The Coherence and Competitiveness Challenge The UK’s great structural advantage has always been its integrated regulatory architecture. With HM Treasury setting the perimeter and the FCA and Bank of England dividing responsibilities along clear conduct and financial-stability lines, the system is far less fragmented than in jurisdictions where multiple federal and state authorities overlap. That should make it easier to deliver a single, coherent framework. But coherence is not automatic. It has to be designed. Firms are now looking at how the layers fit together in practice: how the FCA’s stablecoin rules interact with the Bank’s systemic regime, particularly as firms consider the transition from an FCA-only framework to dual supervision once systemic thresholds are reached; how prudential requirements align with conduct expectations; and how market-abuse, disclosure and trading-platform rules operate as a unified whole rather than as separate compliance exercises. This is not an academic question. Global firms do not build to individual consultations; they build to the overall regime. That determines where they locate trading infrastructure, where they base senior management, where they deploy capital and where new products are launched first. If the cumulative effect is predictable and proportionate, capital and talent will follow, and the UK will continue to be a competitive force around the world. Birdseye View The UK has reached the point where it can no longer be described as a jurisdiction “planning” its crypto regime. It is implementing it, on a defined timeline, with a full licensing process in sight. That is a significant achievement and one that only a small number of global financial centres have matched. The question is no longer one of speed or first mover advantage. It is about identifying the right risks and calibrating them appropriately, allowing firms to operationalise with confidence. The UK is at a crossroads. If the final framework is as coherent and proportionate, the UK has a genuine opportunity to translate regulatory progress into market leadership. Coherence requires not only institutional alignment, but clarity that different asset types and activities are appropriately regulated (or not). That is what will attract firms who are not simply looking for certainty, but for a regime within which they can scale. Otherwise, the UK will struggle to convert historical and structural advantage into long-term competitive advantage.

In August we compared the upcoming stablecoin regimes in the US and UK. Since that post, the UK has moved forward in shaping how these digital assets should be regulated as part of the financial system, especially if they become widely used for everyday payments. This post provides an update to describe the significant changes in direction in the latest UK proposals from the Bank of England and HM Treasury. The Bank of England has the mandate to create rules for ‘systemic’ stablecoins given their potential impact on financial stability, while HM Treasury (part of the UK government) is creating the detailed law that will give UK regulators the powers they need (and set the overall guidelines) to develop regulation. The big change in the UK is the focus on “systemic” stablecoins, and how they and their issuers are to be regulated.  The concept of systemic stablecoin regulation does not appear directly in US law under the GENIUS Act, although provisions of GENIUS require regulators to evaluate stablecoins and their issuers for potential threats to financial system stability. Below, we focus on the UK proposal. Why the UK is Focusing on Stablecoins Now Stablecoins (digital tokens designed to maintain a stable value against a fiat currency) remain the fastest-growing form of money in the digital economy. They are a key pillar of our token classification system, which you can read more about here. The UK government and regulators have been clear: if stablecoins are going to function like money in daily life and not just in crypto trading, then they must be subject to a regulatory framework that protects consumers and safeguards financial stability. The goal is to integrate stablecoins responsibly into the UK’s financial architecture, while also supporting the innovation they represent. This will go hand-in-hand with proposals for comprehensive crypto regulation that were originally introduced in 2023 through proposed changes to the Financial Services and Markets Act. The UK government (HM Treasury) ‘laid’ secondary legislation in December 2025 that would put much of the 2023 updates into effect, including defining stablecoins as regulated financial instruments and regulating their issuance.   The Core Focus: “Systemic” Stablecoins In coordination with HM Treasury and the FCA, the latest Bank of England consultation paper was published in November 2025. Its focus is on pound sterling-denominated “systemic” stablecoins. These are stablecoins that become so widely used in everyday retail payments that, if something went wrong, they might affect not only consumers and businesses at scale, but the wider financial system as well. What makes a stablecoin systemic? While the full details will be clarified in the final regulation, it’s essentially based on how many people and businesses use it (and for what kinds of payments) and the extent of its interconnections with the financial system. HM Treasury has the power to designate stablecoins as systemic and once it has done so, the stablecoin would fall under a joint regulatory regime, with the Bank of England looking after financial stability and prudential requirements, and the Financial Conduct Authority (FCA) overseeing consumer protection and conduct under its own upcoming stablecoin regime.  Non-systemic stablecoins will be regulated solely by the FCA under existing and upcoming cryptoasset rules. A non-systemic stablecoin, for example, is one used for a day-to-day payment or as an on-/off-ramp to the crypto ecosystem that does not have a critical mass of users in the UK.  Note that even with this consultation paper, much of the regulation of stablecoins, their issuers and their usage remains subject to additional rulemaking.  Those looking for certainty need to remain patient, notwithstanding that the government has been considering these issues since at least 2023. New Backing Asset Rules: A Balancing Act One of the biggest changes in the new proposals is how issuers of stablecoins designated systemic would be required to back the coins they issue; that is, what assets they must hold to ensure that coins remain redeemable at a fixed value in pounds sterling. Under the draft proposals: At least 40% of backing assets must be held as unremunerated (non-interest-bearing) deposits at the Bank of England - effectively very liquid central bank money. Up to 60% can be held in short-term UK government debt (gilts), which can earn a return and help make issuer business models viable. This is a shift from earlier proposals that would have required almost all backing assets to be held at the central bank with no interest.  The Bank of England is also considering offering liquidity lines to issuers, and proposes allowing them to repo out backing assets as a means of accessing additional liquidity. The idea is to strike the right balance: making sure issuers can always meet redemption requests even in a crisis, while also not squeezing them out of business by forcing ultra-conservative backing rules.These requirements will make systemic stablecoin issuers look a lot like so-called narrow banks and the stablecoin itself a lot like a central bank digital currency. “Step-Up” and Transitional Rules There are also transitional measures to support issuers that are systemic from the start. Such firms could temporarily hold up to 95% of their backing assets in short-term government debt during their early growth phase, before scaling into the full 60/40 structure. This “step-up” regime is designed to give new market entrants space to grow while still ensuring they eventually meet stringent safeguards. It is designed to limit worries of a ‘cliff-edge’ from transitioning from the FCA to the BoE’s systemic regime. Consumer Safeguards and Limits Controversially, to reduce the risk that stablecoins could pull deposits out of the banking system too quickly (which could affect credit and financial stability) the proposals include temporary holding limits per systemic stablecoin: £20,000 per individual £10 million per business (with exemptions possible for some business uses) These limits are framed as transitional, with regulators monitoring whether they can be adjusted as the market matures. It is not clear how these limits would be enforced from a practical perspective. Other Noteworthy Requirements in the Consultation A few other important parts of the consultation include: Direct payment system access: Systemic stablecoins should be able to settle with traditional money systems, making redemptions and transfers smoother. Safeguarding backing assets: Reserves must be ring-fenced and held in the UK, with clear legal claims for coin-holders. Subsidiary requirements: Foreign stablecoin issuers targeting the UK market would need UK-based and regulated subsidiaries. Birdseye View  While the UK continues to develop and adapt its framework for stablecoins, it seems to be still mired in basics and with overlap between the FCA and BoE’s roles. The BoE’s updated stablecoin policy proposals reflect a pragmatic approach: significant safeguards to protect users and financial stability, flexibility to support issuer viability, and a clear path toward integrating stablecoins into the payments system, which will allow them to be part of commerce in the UK. But some basic concepts still need to be clarified. And the UK is running out of time. Whether this proposed framework will help the UK compete with the US’s crypto-friendly stance and the EU’s MiCA regime remains a live debate.  It’s important to note that these are draft proposals open for comment, and we expect there will be robust discussion between the Bank of England and industry on the details. They are not set in stone and may be subject to change. We will continue to watch with interest for new developments and await the final rules.

We are pleased to announce the initial members of our newly-formed Advisory Council. We warmly welcome Bart Smith and Laine Litman, CEO and COO, respectively, of Avalanche Treasury Co., Jolie Kahn, CEO of Avax One Technology, and Lord Chris Holmes, a director for the Avalanche Foundation and member of the UK House of Lords.  Each brings rich and diverse experience together with a commitment to the Avalanche ecosystem that makes them uniquely qualified for the role.  Lee Schneider, the Ava Labs General Counsel, will chair the Advisory Council.  APC will serve as the policy hub for the Avalanche community, with the Advisory Council charting the course on the themes and priorities for our educational and advocacy efforts.  2026 promises to be a busy year on the policy front with the US and major other jurisdictions (including Australia, Korea, and the UK) moving ahead with comprehensive crypto asset regulation or making significant adjustments to existing regulation.  APC seeks to be the premier resource on foundational blockchain policy and regulatory issues.  Our guiding principles for policymakers and regulators on how to approach blockchain and crypto set the stage for thoughtful, targeted laws and rules that are easy to understand and apply.  The Advisory Council’s goals include providing expertise and insight on key issues and helping to expand our reach to a broader audience. The Advisory Council has set three policy priorities for 2026.  These are the key themes that will guide our advocacy, thought leadership, and other activities during the year.  They are designed to cover matters that impact the Avalanche community directly, and blockchain/crypto policy and regulation in general.  They are also geared towards what we believe are foundational points to undergird all thinking on these topics. First, APC will focus on token classification, refining it for an era of tokenized real world assets (RWA).  The nature of the asset matters for utilization, valuation and legal/regulatory classification, among other things.  If policy makers and regulators get token classification right, it will result in rules that are easy to understand, apply and follow.  Get it wrong, and it will sow confusion, over-regulation, and inhibit growth.  We have seen token classification in action as countries have adopted rules for stablecoins as distinct from other tokens.  Similarly, tokenized stocks and bonds are different from tokenized concert tickets and should not be regulated the same, nor should protocol (network) tokens.   Second, we will focus on the difference between infrastructure and intermediary functions to buttress the dividing line between which activities should be regulated and which should not.  The nature of the activity matters for allocating responsibility and liability from a commercial, financial, legal and regulatory standpoint.  There are efforts in many jurisdictions to push regulatory requirements to the infrastructure layer like never before.  We will keep fighting against these proposals, because it is the specific businesses that should be regulated, not the infrastructure layer providing common rails for all.  Validator nodes, software developers, and hardware providers are prime examples of infrastructure.  On the other hand, banks, brokerages and exchanges are properly regulated as intermediaries. Finally, we will advocate for an open, uncensored internet to keep blockchains functioning.  Access to infrastructure matters as we navigate an increasingly online world for commerce, finance, communications, education and recreation.  We should not tolerate direct or indirect government restrictions on the internet, such as those imposed by the regime in Iran during this turbulent time.  At best it results in censorship of core freedoms; at worst it results in the death of innocents.  Because blockchains depend on the internet, everyone in the community should demand open, uncensored internet access. Here at APC, we have a number of exciting initiatives in the works.  Follow us on X, LinkedIn and Instagram, subscribe for our biweekly update, listen to our podcast, and find us at events around the world.  There is a lot to do in 2026...

What We Learned From Our 2025 Stablecoins in Focus Series TL;DR  • Stablecoins aren’t just “digital money.” They’re becoming part of the infrastructure that moves value. If you’re curious about what they are, click here for a basic definition.  • Across Singapore, Washington DC, the UK, and Argentina, one theme kept coming up: blockchains are public rails for moving value. • Policy works best when it distinguishes “building the rails” (infrastructure) from “running a financial business” (intermediation). • The big question: how do we regulate open rails thoughtfully, without freezing progress or compromising trust? In 2025, stablecoins stopped being a side conversation and became a main event for payments, financial infrastructure, and cross-border coordination. Over the course of the year, the Avalanche Policy Coalition (previously known as Owl Explains) convened four invite-only events across Singapore, Washington DC, London, and Buenos Aires, alongside participation in major payments forums including the Chicago Fed Payments Symposium and Federal Reserve payments innovation event. Each stop brought new perspectives. But together, they told one story: stablecoins are not just about “digital money.” They’re about infrastructure, trust, and how value moves in a global, digital economy. Think of stablecoins like shipping containers for money. The container is standardized. What matters is the port, the rules, and the inspection system that keeps trade safe and reliable. The Common Thread: Blockchains As Public Infrastructure Across every conversation, one theme kept resurfacing. Blockchains function as public infrastructure. Unlike private payment systems, blockchains are open and publicly available. Anyone can build on them and utilize them to transact. If private payment networks are like private roads, blockchains are more like public highways. The rules still matter, but the road is open to many kinds of vehicles.  This changes the economics of payments and financial services by lowering costs, reducing barriers to entry, and enabling new business models. Stablecoins sit on top of this infrastructure and make it usable for real world commerce. In plain English: stablecoins take “public rails”for people to use to pay, save, and move value. They also give businesses new opportunities and flexibility with their customers. This idea resonated strongly at the Chicago Fed Payments Symposium, which marked its 25th anniversary. The event brought together Federal Reserve governors, presidents, staff, and senior leaders from across financial services. A full day focused on traditional payments was followed by a half day dedicated entirely to blockchain and digital assets. That shift alone signaled how far the conversation has moved… and it’s a big deal. At the Symposium, the Avalanche Policy Coalition emphasized a core principle that also guided our Stablecoins in Focus event series. Infrastructure is not the same thing as intermediation. Providing open rails is fundamentally different from acting as a financial middleman. That distinction matters for regulation, innovation, and market structure. A helpful analogy: the internet is infrastructure; a bank is an intermediary. The nature of the activity matters and policy makers should not confuse these buckets and impose the same requirements on each. We discussed this concept in detail in comment letters to the SEC Crypto Task Force in April and May, the Hong Kong regulators in August, and the Australian Treasury Department in November. Three months, four stops, common threads • Singapore showed how clear categories create confidence. • Washington DC focused on trust, guardrails, and cross-border realities. • London was about moving from “debate” to “delivery.” • Buenos Aires showed stablecoins as everyday infrastructure (no longer a faraway theory). Singapore: Clarity Through Structure and Labels Our first Stablecoins in Focus session took place in Singapore, co-hosted with King and Wood Mallesons during Token2049 week. Singapore offered a clear example of how regulatory structure can support innovation. The Monetary Authority of Singapore distinguishes sharply between stablecoin issuance and intermediation. Intermediation activities such as custody, exchange, and transfer fall under existing Digital Payment Token rules. Issuance follows defined frameworks, including an upcoming regime with disclosure requirements, reserve standards, redemption obligations, and capital thresholds. This separation creates clarity without overcomplicating the system. It gives issuers and intermediaries clear guardrails while allowing experimentation within defined boundaries. The Singapore discussion showed how confidence in policy design can encourage responsible growth and innovation. You can picture this as fewer mystery boxes and more labeled drawers. Washington DC: Payments, Infrastructure, and Trust In Washington DC, co-hosted with the Global Blockchain Business Council, the conversation shifted toward payments and market structure. Participants focused on the reality that domestic payment systems in many countries already move quickly. The value of stablecoins is not always speed at the retail level. Instead, it lies in transparency, programmability, and the ability to operate on shared public rails. Translation: stablecoins aren’t just “Venmo but on-chain.” They can be more like shared payment infrastructure that many services plug into with less friction than private systems. Cross-border payments emerged as a key challenge that stablecoins elegantly solve. Traditional systems struggle with interoperability across banks, currencies, and jurisdictions. Stablecoins face a different limitation today, namely the dominance of US dollar denominated instruments. Still, the infrastructure case was clear and an ever-growing list of other currencies have stablecoins. Public blockchains create new options for moving value globally. Think USB-C, not custom chargers: shared standards reduce friction across borders. Regulation was seen as essential for trust. With new legislative efforts such as the GENIUS Act, the United States is beginning to both show leadership and align with other jurisdictions. The mood in DC was pragmatic. Stablecoins are no longer hypothetical. They are becoming part of the financial plumbing. Once something becomes “plumbing,” people stop asking whether it’s trendy and instead start asking whether it’s safe, resilient, and well-governed. London: From Debate to Delivery London brought urgency. Co-hosted with Innovate Finance, the UK Stablecoins in Focus event focused less on defining stablecoins and more on what it would take to make them work at scale. There was broad agreement that the UK risks losing its fintech edge if stablecoin policy remains stalled between the government, the Bank of England, and the FCA. Several themes stood out. Programmable money should be understood as a platform, not a product. Innovation happens when infrastructure exists first and use cases follow. Privacy and transparency should not be treated as opposites. Institutions need confidentiality. Regulators need visibility. Market driven solutions are already emerging to support both. Basically, you can build systems where regulators get the oversight they need without broadcasting everyone’s business to the whole world. The discussion also highlighted the importance of distinguishing between retail and wholesale use cases. A single framework risks freezing innovation. Iteration and experimentation matter, especially for institutional settlement and tokenized markets. In London, the question was no longer whether stablecoins matter, but whether the UK would move quickly enough to not be left behind, even if it does not lead. It felt less like “Should we?” and more like “If not now, when?” Argentina: Stablecoins as Real World Infrastructure Our final Stablecoins in Focus event took place in Buenos Aires, co-hosted with FinLaw and Draper House. The conversation there grounded everything we had discussed elsewhere (and featured a delicious Argentinian asado with chimichurri… if you know, you know). In Argentina and across Latin America, stablecoins are not abstract policy tools. They are used for saving, payments, and cross-border transfers in everyday life. What began as a way to protect savings has evolved into real financial infrastructure. The Argentina discussion reinforced that local context matters. Payments systems, currency dynamics, and access needs differ by region. Public blockchain infrastructure allows these differences to coexist while remaining interoperable at a global level. Latin America illustrated what happens when necessity meets open technology and where openness drives adoption. Stablecoins move from theory to practice. So if our Singapore event was policy design, our Buenos Aires event was more like policy meets real life. What These Conversations Add Up To From Singapore to DC, London to Buenos Aires, one insight became clear. Stablecoins are a visible entry point into a much larger shift. Blockchains provide public infrastructure that challenges existing payment and banking rails by offering an alternative that is open, lower cost, and globally accessible. This does not mean private systems disappear. It means new market discipline is introduced. New forms of freedom and competition emerge.  Infrastructure is not the same as intermediation. Regulation should reflect that distinction. When it does, good actors enter the market. When it does not, risk increases. So, how are we regulating the rails, the vehicles, or the drivers? If we mix those up, we get confusing rules and worse outcomes. These events left us optimistic. Even though the answers were not always simple, the conversation is finally catching up to the technology. Payments and stablecoins will continue to command attention, and rightly so. What matters now is building policy frameworks that recognize public infrastructure as a new and legitimate way to move value. And importantly: doing it in a way that preserves trust, because payments are trust systems first. At the Avalanche Policy Coalition, we will keep convening, listening, and translating these global perspectives into clear policy conversations. The future is being built on open rails. The question is how thoughtfully we choose to govern them.  Want to stay updated on our future events? Subscribe to our newsletter and follow the Avalanche Policy Coalition on X, Linkedin, and Instagram. 

TL;DR 🦉 Our proposal: regulate crypto market structure by updating requirements for the intermediaries the SEC and CFTC already oversee. Near-term: issue exemptive orders to create an opt-in “grace period” for existing regulated intermediaries to trade, settle and custody crypto. Longer-term: use notice-and-comment rule-making to provide permanent regulation of intermediary crypto activities. 🧠 Why it matters: creates more robust, competitive U.S. markets, with clear compliance obligations and customer protections. Crypto policy moved fast last year, and that’s good news. Congress passed the GENIUS Act with bipartisan support and made strides on market structure legislation. Meanwhile, the SEC and CFTC quickly began identifying and removing barriers for digital asset innovation and engaging stakeholders for deep discussions on how to provide clarity and relief. But one problem is still slowing the U.S. down: market structure uncertainty. In other words, market participants don’t know what’s allowed, which inhibits further growth of robust, competitive markets and customer protections.  Our solution is simple: use existing SEC/CFTC tools to create clear rules of the road now, starting with a transitional “grace period” through exemptive relief and followed by durable rule-making. Against that backdrop, Owl Explains (now known as the Avalanche Policy Coalition)* submitted comment letters to the SEC and the CFTC explaining how the agencies could create a market structure framework for trading crypto, specifically protocol tokens, independent of legislation. We discussed our ideas with the SEC Crypto Task Force in mid-December, shortly before the publication of the Statement and FAQs that moved in the direction we advocated. We like the terminology “protocol tokens” because it refers to a token that is integral to the functioning of a protocol, the amalgamation of software that provides an operating system or application. This definition is technology neutral, but also covers tokens integral to blockchain networks and all their associated functional protocols and layers including DeFi, L2s, restaking and liquid staking applications, subnets and custom L1s, etc. Our main concept for both agencies is straightforward: regulate market structure through requirements on the intermediaries that they already oversee. The financial services industry has lots of experience with electronic trading, settlement and custody so leveraging existing regulatory infrastructure makes sense. Protocol tokens are just another asset that trades and settles electronically, such that it can be supported by well-established market integrity and customer protection controls. Our idea also recognizes the years of struggle about whether protocol tokens are securities or commodities, and takes the practical approach by having both agencies exert jurisdiction through their regulated intermediaries, which is within their statutory mandates. To kick things off, we suggest the agencies use their exemptive powers to create a transitional “grace period” during which regulated intermediaries could opt in to conducting activities in protocol tokens via a notification and certification process confirming their implementation of relevant policies and procedures. The policies and procedures could cover, as relevant, custody and segregation controls, conflicts of interest, market surveillance and manipulation detection, disclosures, recordkeeping, and operational resilience. The grace period would last while rule-making occurs to adapt rules for regulated entities engaging in protocol token activities. This post briefly explores the agencies’ powers under the Administrative Procedure Act (APA) and elsewhere to grant exemptive relief and conduct rule-making to show how our proposals might be accomplished through existing agency powers. This post is for informational purposes only; it is not legal advice. The relevant laws are complex, and readers should consult counsel before acting on any specific proposal. The Administrative Procedure Act The APA governs how federal agencies develop and implement rules and adjudicate administrative litigation related to such activities. The core principle of the APA is to ensure that agencies operate in a manner that is transparent, enables public participation through a standardized process, and provides for a fair adjudication process. Agency actions are reviewed by federal courts for compliance with the APA and other relevant statutes, as well as the Constitution. Courts will overturn agency actions that are “arbitrary and capricious” or violate congressional intent. The Supreme Court in Loper Bright shed further light on how courts review agency actions. That makes the quality of the agencies’ statutory analysis and rule-making record especially important for any durable crypto market structure framework. The APA provides two primary tools for agency action: rule-making and adjudication. The rule-making process governs how agencies develop new regulations or amend existing regulations. For example, our proposals to the SEC and CFTC suggest developing new regulations and amending existing regulations aimed at creating robust, competitive markets for protocol tokens by regulating existing registered intermediaries. Under the APA, this process would involve proposing rules and soliciting written public comments for some period, usually between 30 and 90 days, depending on complexity. The agencies then review the comments and assess whether and how to incorporate them as they prepare a final rule. Like rule proposals, final rules are published in the Federal Register—the U.S. Government’s official record that is used to announce new rules, among other things. New rules go into effect some period of time after publication. Note, however, that the notice and comment process may be suspended if there is “good cause,” and this is referred to as an interim final rule.  The other main part of the APA, adjudication, is when an administrative agency conducts an enforcement action to address a specific case based on the facts and circumstances, which is not relevant to our proposal but occurred a lot under prior SEC leadership.  Meanwhile, other common agency communications, such as interpretive rules, and general statements of policy are explicitly exempted from the APA. Exemptive Orders In addition to the SEC and CFTC being governed by the APA, Congress provided each agency with its own process for issuing exemptive relief. The agencies’ exemptive order authority complements the APA and allows the agencies to offer regulatory relief and respond to market conditions quickly. As Congress, through legislation, and the agencies, through rule-making, work on crypto market structure, each agency can offer clarity to market participants through exemptive relief, such as the grace period we propose. This can function as a credible bridge: faster than rule-making, but more formal and durable than informal guidance. The authority for these orders comes from specific sections in the foundational laws of each agency. The SEC’s authority is found in both the Securities Act (in Section 28, focusing on creation, registration, and initial sale of securities and codified at 15 U.S.C. §77z-3) and the Securities Exchange Act (in Section 36, focusing on intermediaries and trading and codified at 15 U.S.C. §78mm). Each provides the agency with broad general exemptive authority, “to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.”  The Exchange Act specifically allows exemptive relief via Commission order, which is relevant to our proposal because it relates to regulation of intermediaries. The CFTC’s authority is found in Section 4(c) of the Commodity Exchange Act (7 U.S.C. §6(c), allowing it to exempt any agreement, contract, or transaction if it is consistent with public interest and applicable law, it does not have a material adverse effect on the CFTC or contract market or derivatives transaction execution facility, and the transaction is between “appropriate persons” (essentially, regulated financial services intermediaries and other market participants).  Before implementing an exemptive order, each agency typically provides an opportunity for public comment through publication of information about the proposed exemption in the Federal Register. Agency staff review any public feedback before finalizing the exemptive order. The CFTC typically votes on the issuance of the final order, while the SEC may choose to vote (usually if the issues are novel) or delegate authority to a division director to implement the order.  The result of the exemptive order process is a commission-level action that binds the agency and all regulated entities, which is stronger than non-binding communications, such as a no-action letters, FAQs and division statements. In this way, an exemptive order can offer market participants a transitional grace period through quick and binding agency action to meet the needs of a rapidly evolving market structure. For compliance teams, that durability matters: it supports consistent supervisory expectations and reduces the risk of shifting interpretations. Although mentioned above, this note does not discuss interim final rule-making, which is designed for emergency situations. While it could be relevant to the implementation of our proposal, the agencies right now are content to operate through their interpretive powers, so the exigent circumstances that typically apply to interim final rule-making do not seem present. Why We Advocate for Exemptive Relief and Rule-making Both agencies have recently issued various forms of interpretive guidance on crypto activities to their regulated entities. While these interpretations provide clarity on the agencies’ thinking about specific areas, they do not have the binding effect of an exemptive order or a rule-making. Moreover, our proposed transitional “grace period,” created by exemptive order, would formalize a process for all regulated entities who wish to engage in protocol token activities. And the rule-making process would settle many more issues for regulated entities, giving market participants clarity on how to proceed with their activities in protocol tokens. We believe the agencies have both the opportunity and the power to jump-start robust, competitive markets in the United States. And we know from the interpretive guidance releases that both agencies are thinking carefully about how regulated intermediaries can conduct the activities in crypto. Accordingly, we hope to see exemptive orders and rule-makings in the near future to formalize and solidify this important work and take further action to maintain the competitiveness of the U.S. If you are a market participant, policymaker, or other stakeholder, now is the time to engage. Why? Because the conditions set during a grace period can shape the durable rules that follow. *same Owl, new name

For decades, the ‘Special Relationship’ between the US and UK has been one of shared economic DNA - grounded in markets, common law traditions and a mutual belief that innovation thrives when rules are clear and fair. And given the progress made in both jurisdictions on crypto in the last 12 months, it seemed natural when, at a US delegation visit to the UK in September, The Chancellor of the Exchequer Rachel Reeves, welcomed US Treasury Secretary Scott Bessent, to Downing Street to “reaffirm their deep and historic connection between the world’s leading financial hubs in the United Kingdom and United States.” And so was born the Transatlantic Taskforce for Markets of the Future. What is the Taskforce? The Taskforce is a joint initiative anchored by both countries’ finance ministries and supported by their financial market and digital asset regulators. Its remit is to reduce friction for cross-border capital formation and deepen coordination on digital-asset policy, including how best to supervise firms, support safe market infrastructure, and enable responsible innovation.  At a practical level, the Taskforce is anticipated to deliver options for short-to-medium-term collaboration on digital assets (while legislation and regulation continues to evolve) and to explore long-term opportunities in wholesale digital markets - everything from secondary trading plumbing to tokenized instruments and settlement models.  The chairs and conveners are the US Department of the Treasury and HM Treasury, with participation from relevant regulators focused on capital markets and digital assets. Depending on the topic, that likely includes securities, banking, and payments authorities as well as supervisory teams with active digital asset remits. Importantly, the Taskforce has been framed as a whole-of-markets effort, not a crypto-only silo - which is why capital markets access and wholesale innovation sit alongside digital-asset supervision.  Industry isn’t a formal “member,” but engagement with market participants is clearly anticipated. Recent commentary from senior US regulators and market leaders has leaned in favor of coordinated transatlantic approaches - including concepts like mutual recognition or “passporting-style” access in the long run - precisely because duplicative compliance undermines both competitiveness and safety.  Beyond the Press Statement - What is Achievable? The Taskforce is required to report within 180 days - and there are many helpful areas that it could support: Reducing regulatory fragmentation and increasing reciprocity. Right now, firms operating in both the US and UK often face two different regimes even where the principles are similar; for example, what constitutes custody, or how stablecoin reserves should be held. The Taskforce can help regulators create reciprocity agreements across the two regimes, which lowers compliance costs and uncertainty for everyone. Build mutual confidence and supervisory cooperation. Regulators are more likely to trust each other’s oversight if they understand one another’s frameworks and risk-management standards. That, in turn, could make cross-border approvals and recognition processes faster and smoother, particularly for well-run firms. Strengthen the resilience and competitiveness of both markets. Closer alignment reduces the temptation for firms to choose one jurisdiction over the other, while reinforcing shared standards for transparency, governance, and consumer protection. For investors and users, that should translate into better-functioning cross-border markets. Set the tone for global standards. The US and UK remain highly influential in international financial services supervision. If they can show that proportionate, innovation-friendly regulation is achievable, it gives other jurisdictions a credible model to follow, potentially leading to broader global coherence on digital asset oversight and perhaps even global trading markets. Prioritization from the Nest There are three topics that we’d like to see the Taskforce prioritize: Token Classification for Real-World Asset Tokenization Across the UK and US, it is crucial that a coherent definition is developed of which tokens are going to be regulated. There needs to be clear legal and regulatory standards for tokenized assets, including where the token (the digital representation), and the asset (which should be regulated according to its nature) are one and the same. Broad definitions of “digital assets” or “cryptoassets” risk breaking down this distinction.  The Taskforce should focus on developing this definition collaboratively, to create something pragmatic and implementable across both jurisdictions. 2. Intermediation vs Infrastructure All proposals and rule makings around the world focus on who to regulate and in particular, which actors and activities constitute intermediaries. However, providing infrastructure, whether software, hardware or communications, is not acting as an intermediary. Validators and miners are not intermediaries and neither are API providers, block explorers or analytics firms. Nor is providing self-custody wallets or simply writing code (implementing it can be in very specific situations).  The regulatory frameworks across both jurisdictions would not only benefit from implementing protections to prevent infrastructure providers being regulated as intermediaries, but would also enjoy significant competitive advantage on the global stage as a result. 3. Stablecoins and Reciprocity Stablecoins will sit at the heart of the future of the digital economy, underpinning everything from cross-border payments (for commercial or individual purposes) to on-chain settlement in financial markets. Both the US and the UK are now building comprehensive regimes, but neither has yet finalised its rules. That creates a real window for the Taskforce to guide how the two frameworks can work together rather than grow apart. The GENIUS Act already anticipates reciprocal pathways, and the FCA has a long track record of constructive international cooperation.  A Taskforce-led effort to map out practical forms of deference once both regimes are live could prevent duplicative oversight, reduce friction for issuers, and give users greater confidence in the quality and safety of stablecoin rails across both markets. If the groundwork is laid now, those mechanisms could be activated from day one, rather than tackled years after the fact. The promise of the Taskforce lies less in grand announcements and more in whether it can stitch together practical, workable bridges between two ambitious but quickly evolving regimes. Expecting full harmonization would be naïve, but expecting meaningful transparency and collaboration is not. If the US and UK can use this moment to build trust, reduce avoidable divergence, and set a tone of openness to responsible innovation, the Taskforce could become more than a diplomatic gesture. It could be the start of a quieter but more lasting shift toward genuinely interoperable digital-asset markets. Let’s hope the next 180 days lay those foundations...

If the 20th century was about building highways for cars, the 21st is about building highways for money. After a long period of building foundations for institutional-grade capability, blockchain has finally reached a point of technological and business viability. In August, Wyoming flipped the switch on one of the first government-run lanes on the blockchain From Cattle to Code Wyoming has long been known for open plains and open skies — but now it’s pioneering open finance. In August 2025, the state launched the Wyoming Stable Token (FRNT - formerly WYST) on Avalanche, marking the first U.S. state-issued stablecoin fully backed by short-term Treasury bills and managed under a transparent, legally defined framework. Each FRNT token represents a digital dollar substitute:1 token = 1 US dollar, backed by state-managed reserves. Unlike privately issued stablecoins, FRNT isn’t a speculative instrument. It’s a public utility: programmable, auditable, and backed by the full credibility of the State of Wyoming. The logic is simple but revolutionary: if states are responsible for monetary integrity within their borders, why shouldn’t they participate in digital money issuance too? Compliance by Design For regulators, the most important story here isn’t the coin, but rather the architecture. The Avalanche network was selected not because it is the loudest or most popular chain, but for its modular performance characteristics and mature tooling.  In July 2025, Wyoming showcased instant vendor payments in a state pilot using Hashfire, an Avalanche-based platform that ties authenticated contracts to programmable payouts in FRNT, cutting payment timelines from weeks to seconds. A month later, the Wyoming Stable Token Commission announced the FRNT mainnet launch, with Avalanche among the supported networks and subsequent distribution expanding to seven blockchains.  Hashfire provides the contracting and payment automation layer while FRNT provides a state-issued, over-collateralized digital dollar that can move on public chains with auditability. Rather than relying on bespoke, closed rails, Wyoming anchored the token to public infrastructure and paired it with a workflow layer that enforces approvals and creates a tamper-evident audit trail.  Avalanche is an ideal platform for government payments due to its practical advantages: finality in seconds, low settlement costs, and an energy-efficient proof-of-stake design. Furthermore, its multi-chain issuance capability prevents vendor lock-in and fosters greater interoperability, making it suitable for production-grade use. The technology doesn’t evade regulation; it operationalizes it through transparent ledgers, rule-driven disbursements, and public reporting. And that’s a blueprint more states should be watching. The Wyoming Model Since 2019, Wyoming has passed more than 30 blockchain-related laws. It created Special Purpose Depository Institutions (SPDIs) to give digital-asset companies access to banking services, established legal definitions for digital property, and built a clear framework for stable token issuance through the Wyoming Stable Token Act. The FRNT project specifically is being led day-to-day by the Wyoming Stable Token Commission (WSTC), which was established more than two years ago through the Wyoming Stable Token Act. The state government is backing the WSTC with a budget of $5.8M. FRNT is the natural culmination of that work — the bridge between state treasuries and digital finance. The token is fully redeemable, transparently backed, and non-fractional. Monthly audits are mandated, the State Treasurer oversees issuance, and every FRNT transaction settles on chain, meaning jurisdiction and compliance are crystal clear. This alignment of law, technology, and finance is rare in the blockchain world. It shows that public institutions can innovate within existing statutes, rather than outside them. Why It Matters for Policymakers Federal and state agencies have spent years grappling with one fundamental question: How do we bring digital assets under the umbrella of the existing financial system?  Wyoming’s approach offers a live blueprint. By leveraging Avalanche’s L1 architecture, the state created a sovereign, rule-abiding financial system within a broader network. A sandbox where state and federal compliance can coexist with innovation. In a post-CBDC debate world, FRNT is a political middle ground. It avoids the surveillance fears tied to central bank digital currencies while delivering the efficiency gains of programmable money. It’s the regulatory equivalent of having your cake and auditing it too. Federal regulators can view it as a “federalist pilot.” A controlled, transparent testbed that respects both state sovereignty and national compliance frameworks. FRNT could eventually integrate with FedNow or Treasury-led payment rails, creating a unified but flexible model for digital government money. The Broader Policy Context Across the United States, momentum is building toward this vision, but progress remains uneven. Texas is investigating blockchain applications for land registries and oil royalty management. California’s Department of Financial Protection and Innovation has convened a Digital Financial Assets working group to study consumer protections and licensing frameworks. Florida has piloted blockchain programs for vehicle titles and state payments. Illinois has explored distributed ledgers for Medicaid record-keeping and benefits tracking. There are important steps; but so far, they’re isolated experiments. What Wyoming has accomplished with FRNT and Avalanche is not just another pilot, it is operationalization. It is the transition from theory to production, built on sound policy and proven infrastructure. FRNT is policy that works, and code that proves it. As the federal conversation evolves, three priorities will define the next stage of U.S. blockchain regulation: standardization, transparency, and sovereignty.  Standardization will ensure interoperability between public and private systems. Transparency will guarantee that citizens and regulators can verify how digital assets move, without compromising individual privacy. And sovereignty will allow states, agencies, and regulated enterprises to retain control over their infrastructure and data. AvaCloud’s model of sovereign, customizable Layer-1 blockchains aligns naturally with all three. Conclusion The FRNT model demonstrates that public institutions can issue stablecoins without handing over control to private companies, and that transparency can be built into the code, not just the oversight process. Also, FRNT shows that states can lead in digital transformation without waiting for Washington to act. FRNT moves money faster, while also moving public finance into the future. Wyoming didn’t just launch a stablecoin: it launched a model for digital statecraft.

On July 18, 2025, President Trump signed into law the GENIUS Act, the first U.S. regulatory framework for payment stablecoins. The law establishes a dual federal–state regime for stablecoin issuers, requires strict reserve backing, provides for redemption rights and sets rules for foreign issuers operating in the United States.  It also introduces a new category of intermediary - the Digital Asset Service Provider (DASP) - and spells out obligations for these entities.  Importantly, certain activities are excluded from the definition of DASP, in recognition of the difference between providing infrastructure and acting as an intermediary.  We have discussed this overarching point at some length in our first submission to the SEC Crypto Task Force and expanded on the “nature of the activity” test in our second submission.  This distinction between infrastructure providers and regulated intermediaries is important for the GENIUS Act and beyond. How DASPs are defined Under the GENIUS Act, DASPs are defined as entities that: Exchange digital assets for money  Exchange digital assets for other digital assets Transfer digital assets to a third party Act as digital asset custodians Provide financial services related to digital asset issuance These categories line up with various acknowledged types of intermediaries, including from the 2019 Guidance issued by FinCEN on money services business activities in convertible virtual currencies.  The federal securities, commodities and banking laws all require equivalent activities to be done in a regulated entity. What DASPs are not Congress recognized that certain activities are not those of an intermediary and excluded them from the definition of DASP in the GENIUS Act.  In particular, the DASP definition excludes:  a distributed ledger protocol; developing, operating, or engaging in the business of developing distributed ledger protocols or self-custodial software interfaces; an immutable and self-custodial software interface; developing, operating, or engaging in the business of validating transactions or operating a distributed ledger; or participating in a liquidity pool or other similar mechanism for the provisioning of liquidity for peer-to-peer transactions. These exclusions are comparable to the distinctions drawn by FinCEN about money services business activities, as well of those of some international financial regulators with respect to their intermediaries.  They reflect an understanding that providing infrastructure - such as deploying hardware, developing software, or providing communications and data - is not the same as offering regulated activities. Both of our submissions to the SEC Crypto Task Force highlighted this same principle: infrastructure that enables transactions by individual actors should not be treated the same as intermediaries that solicit or execute them on other actors’ behalf, or custody the assets.  Our second submission argued for a “nature of the activity” test that focuses on what a firm does, not the technology it builds or deploys.   Why it matters – the growth of tokenization We have long advocated for a sensible, workable token classification that recognizes the nature of the asset as paramount, including through many comment letters to regulators and other authorities around the world.  With the ongoing rise of tokenization of “real world assets” such as regulated financial instruments, we expect to see more regulated intermediaries become involved on a global basis.  In addition to common US intermediaries like broker-dealers, exchanges, FCMs and banks, this will include European CASPs and MiFID intermediaries, those regulated by the Japan FSA, the Korean FSC, the Monetary Authority of Singapore, the Hong Kong SFC and the UK FCA as well as many other financial regulators around the world as and when their regulatory regimes come on stream. In all these jurisdictions, the distinction between offering regulated activities and providing  infrastructure will grow in importance as more assets are tokenized on blockchains and more transactions are conducted via smart contracts.  This dividing line is relevant regardless of whether the network or application is centrally controlled or distributed and permissionless.    Exclusions like those in the GENIUS Act are a key milestone for crypto policy by helping regulators distinguish between intermediaries that offer services to others and the providers of infrastructure.  The text gives market participants greater clarity, sets a precedent for future legislation and rulemaking, and gives support to common sense notion that technology infrastructure should not be regulated like financial middlemen.