Host: Well, fintech innovation is accelerating across retail trading platforms from SEC zero cash balance relief and 24/7 trading to RWA tokenization, as well as volume in prediction markets. And as we head into the final months of 2026, Bitcoin is down over 30% from its all-time high of 126,000 we saw at the end of last year. But that crypto major has come well off of 2026 lows, and it's been a little less than a month since the clarity at cloture vote failed in Congress. And since that time, the regulatory agencies have taken the ball. Just yesterday, the CFTC proposing its First comprehensive framework for leverage crypto trading. Well joining us here at Stocktoberfest to break this down is Ethan Silver, partner for Lowenstein Sandler LLP. Great to have you here. Thank you so much for joining me.
Ethan Silver: Yeah, great to be here. Thanks for having me.
Host: Well, when we take a step back and look at what's happened across digital assets, 2026 has been quite the year. So when it comes to market structure, what do you think is important to keep in mind and what are the key takeaways so far?
Ethan Silver: Well, it's interesting because when the Clarity Act failed, right, if you, if you go back 18 months, you know, it was almost a certainty on polymarket for passing and fast forward and we're without it, the SEC CFTC were very much aligned in coming together and saying we need a backup. They've talked about this innovation exemption for a long time. And the taxonomy that came out in March, fast forward to now August, September, even the beginning of October, they're rapid fire putting out relief trying to push this forward, giving some indication of despite clarity not passing, these are things that are going to happen, whether that be with With transfer agents and enhancing or modernizing transfer agency, um, with regulation crypto, right, and trying to uh build the capital markets for, you know, tokenized businesses, the innovation exemption, right? And what, what that will do for certain parties and then on the CFT side. CFTC size, sorry, um, you know, extending margin to retail, which that's debatable whether that's a good thing or not, but, you know, we're here for that these days.
Host: Yeah, and Ethan, you and I are here at Stocktoberfest, so this is a Stockwits event, and when it comes to the regulatory landscape, it can be very confusing for the retail investors, especially if they're in tokens, trading crypto, or maybe they're Accessing crypto through ETFs. But in terms of the taxonomy, we've been hearing a lot from the CFTC as well as the SEC in the aftermath of the cloture vote uh for clarity failing. So what do you think are the key takeaways that retail investors should really be focusing on?
Ethan Silver: Well, it, I, I don't know honestly whether retail investors are following any of that, right? They want, they want access to the markets. You can see the numbers from just The amount of contracts on Robinhood, for example, has gone sky high. It's probably the the biggest money producer for the company, right? So like retail traders just want that. What what Howard has liked to call the degenerate economy, but it is, it is bearing out, right? Whether it's, you know, new companies like a FOMO or how they use Pump.fun or Calci or Polymarket or Robinhood, right? They, they are, they are very focused on, you know, the betting that is behind this and the, the action that comes. With it. And so, you know, whether from a regulatory perspective, I'm not sure honestly that, that retail traders are focused on any of that. It's more about what are the roadblocks for me to be able to transact in this space.
Host: Yeah, and absolutely. So expanding on that, give us your perspective on prediction markets because we have been hearing so much when it comes To individual states versus federal. So how do you think all of this is gonna shake out?
Ethan Silver: Yeah, so it's, it's incredibly interesting, right? Like, you know, historically, it's always been gambling is a, is a state law issue, right? Um, the lobby at the states and the Native American lobby for their own casinos is, is incredibly strong, um, and now enter a Calci. Uh, with the focus on calling this a swap essentially, right, and that belonging in the sole exclusive jurisdiction of the CFTC to regulate, um, they're obviously going to collide, and they have, and now, you know, you're seeing. What typically were Republican states rights folks on the other side saying this is a federal law issue, um, you have the circuit courts now disagreeing amongst one another and so you have pockets of states, um, taking either the federal view or the state view. And it seems just destined for the Supreme Court in 2027, and uh it's, it's unclear exactly where that's going to really land, but uh these companies have a lot betting on that. Pardon the pardon the pun, um, yeah, sorry, yeah, and Ethan, finally, before I let you go, for startups that are trying to navigate this landscape, what would you say to them?
Ethan Silver: Yeah, I, I think you, you need to be somewhat hedged in this, right? Like the administration may change in a couple of years, and the views of what, what the Trump administration has had around these markets may about-face, and we saw that, you know, 4 years ago. So I, I think a company like a DraftKings or FanDuel, you know, have that hedge built in, and I think that may be a necessity.
Host: Well, Ethan, there are a lot of moving parts here, so I appreciate you breaking it down for all of us today, and I hope you have a great time here at Stoketoberfest here in New York. Thank you so much.
Ethan Silver: Thank you very much.
