On July 30, 2025, the White House released a 166-page report titled “Strengthening American Leadership in Digital Financial Technology” (the “Report”).[1] Authored by a working group of cabinet members and federal agency officials, the Report calls for the expansion of American digital asset markets; the abandonment of “regulation by enforcement” with a refocus of enforcement efforts on terrorists, drug cartels, and other bad actors; and a revamp of bank regulatory and tax policies, among other things. It identifies key federal and other regulators that exercise jurisdiction over digital asset markets and endorses the most sweeping set of Executive Branch recommendations to change financial laws within the United States since the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Digital Asset Market Structure: The SEC and CFTC
Consistent with previous administrations, the Report recognizes the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) as the “primary federal regulators of secondary digital asset markets.”[2] The Report, however, criticizes past use of enforcement actions as the primary digital asset regulation mechanism, as opposed to developing a regulatory framework for digital assets. It calls for the SEC and CFTC to use their existing authority to “immediately enable the trading of digital assets at the federal level.”[3]
The Report provides a proposed “taxonomy” for digital assets, separating them into three categories:[4]
- Security Tokens: Digital assets that constitute securities because, for example, they represent an interest in equity, bonds, or security-based swaps, or form part of an investment contract. The Report notes that security tokens include tokenized securities.
- Commodity Tokens: Digital assets that are not security tokens (i.e., digital assets that aren’t securities). The Report notes that this category includes network tokens, meaning tokens that are connected to the functioning of a decentralized network or protocol; examples include bitcoin and ether.
- Tokens for Commercial and Consumer Use: Digital assets that are used to access some good, service, or privilege and subject to laws relating to commercial transactions. The Report notes that this category includes non-fungible tokens representing identity credentials or event tickets.
Importantly, with respect to security tokens, the Report recognizes that the existing regulatory framework established by the Securities Act of 1933 (the “Securities Act”) applies to securities tokens, including those that are “investment contracts” under the Supreme Court’s 1946 Howey test, which has been widely applied by the SEC, state securities regulators, and federal and state judges to the question of whether certain digital assets are securities.[5] It also recognizes that intermediaries acting as brokers or dealers in digital assets that are securities are required to register with the SEC and are subject to SEC oversight.[6]
The Report recommends that the SEC and CFTC use their respective rulemaking and exemptive authority to provide further regulatory clarity surrounding digital assets, including with respect to registration, custody, trading, and recordkeeping. The Report further recommends that the SEC and CFTC should be coordinated in any rulemaking processes. The CFTC’s Acting Chairman, Caroline D. Pham, announced on August 1, 2025, that the CFTC will “kick off a crypto sprint to start implementing the recommendations in the [Report].”[7] Similarly, on July 31, 2025, SEC Chairman Paul S. Atkins announced the launch of “Project Crypto,” “a Commission-wide initiative to modernize the securities rules and regulations to enable America’s financial markets to move on-chain . . . [and] swiftly develop proposals to implement the [Report’s] recommendations.”[8]
Specific recommendations include for the SEC to establish a “fit-for-purpose” exemption for offerings involving digital assets under Securities Act Section 5, “fit-for-purpose” registration regimes for digital asset trading platforms, brokers-dealers, custodians, and other market participants, and disclosure requirements that are appropriately tailored to address the novel characteristics of digital assets. Notably, the Report calls for rule revisions to permit registrants to bundle trading and custody or exchange and broker services. Such changes would enable creation of so-called super apps. The Report also calls for clearer jurisdictional lines between the SEC and CFTC and urges Congress to provide both with additional regulatory authority where necessary.
Banking and Digital Assets
The Report creates a clear break between the approach of the federal banking agencies (FBAs) to digital asset activities under the Biden administration—which generally involved cautioning banks against engaging in such activities—and the approach under the Trump administration, wherein the FBAs have each withdrawn prior Biden administration guidance and issued guidance and public statements acknowledging the permissibility of certain digital asset activities.[9]
The Report calls for further clarity from regulators concerning the scope of permissible digital asset activities and supervisory expectations related to such activities for both federally chartered and state-chartered banks and credit unions, including with respect to:[10]
(i) custody of digital assets (including guidance on technical best practices),
(ii) use of third-party custodians,
(iii) holding stablecoin reserves,
(iv) holding digital assets on balance sheet,
(v) the ability for banks to participate in pilots and experiments related to digital assets,
(vi) tokenization activities, including with respect to deposits, and
(vii) use of permissionless blockchains.
The Report notes the importance of employing a technology-neutral approach in adapting the current banking regulatory framework—i.e., technological advancements do not necessarily alter the risk profile of an activity—and the same business presenting the same risk should be governed by the same rules.[11]
The Report also emphasizes the need for clarity concerning capital treatment for digital asset exposures in the risk-based capital frameworks for both banks and credit unions, and generally states that the FBAs and the U.S. Department of the Treasury should advocate for modernization of the international Basel Committee on Banking Supervision (BCBS) standards to (i) incorporate new data on digital asset market performance and risk and recent innovations in distributed ledger technology, and (ii) revisit the calibration of prudential standards since the BCBS standards were first published.[12]
In addition to a better-defined regulatory framework for banks and credit unions, the Report also endorses clarity and transparency regarding the process for eligible institutions to obtain a bank charter or a Federal Reserve master account to enable access to payment services.[13] This effort includes the FBAs clarifying and defining in regulation the expected timelines for decision-making on completed applications for charter licensing (including federal deposit insurance, where applicable) and requesting a Reserve Bank master account. Among other things, the FBAs should “confirm that otherwise eligible entities are not prohibited from obtaining bank charters, obtaining federal deposit insurance, or receiving Reserve Bank master accounts or services solely because they engage in digital asset-related activities.”[14]
Stablecoins and Payments
The Report highlights the recent legislation concerning stablecoins—the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which was signed into law on July 18, 2025—and endorses its implementation as a means to clarify the regulatory framework for U.S.-licensed stablecoin issuers, promote innovation and competition, mitigate risks to the financial system, and protect consumers.[15] The Report also discusses the potential importance of U.S. dollar-backed stablecoins as a means for promoting the competitiveness of the dollar for cross-border payments and financial transactions. The Report’s overarching recommendation: the faithful and expeditious implementation of the GENIUS Act.
Separately, and consistent with a prior Executive Order, the Report recommends banning any Central Bank Digital Currencies within the United States.[16]
Countering Illicit Finance
The Report recognizes the need for continued deterrence of bad actors in this space and calls for an approach that balances the use of law enforcement tools so as not to blunt innovation while at the same time protecting the financial system from abuse. To that end, the Report outlines a shift in approach to digital asset enforcement by emphasizing that the Department of Justice (DOJ) will not pursue “regulation by prosecution” and instead will focus on prosecuting those who use digital assets to commit crimes such as terrorism, narcotics, and human trafficking, organized crime, hacking, and cartel and gang financing, or who victimize digital asset users.[17] The Report largely recommends enhancing existing statutory regimes to better cover digital assets.[18] Notably the Report leaves open the question of how to square DeFi with anti-money laundering requirements and encourages the Treasury Department to evaluate next steps.
The Report highlights the importance of an effective anti-money laundering framework for digital assets.[19] The Report acknowledges the growing misuse of digital assets while recognizing that, on the whole, crimes in this space remain a small percentage of overall activity. To improve protections, the Report recommends updates to the anti-money laundering and countering the financing of terrorism (AML/CFT) framework to clarify definitions for Money Service Businesses as related to digital assets, and calls for FinCEN to modernize Suspicious Activity Reports to cover digital asset activity, and harmonize this with IRS Form 8300.[20] The report recommends additional updates to Section 311 of the USA PATRIOT Act to cover digital assets as “certain transmittals of funds,” including revisions to the investigatory anti-tip off provision 18 U.S.C. § 1510 to cover digital asset institutions and modifications to 18 U.S.C. § 984.[21]
The Report stresses that while individuals should be able to transact privately on public blockchains, regulated intermediaries must still identify customers, report suspicious activity, and block transactions as required under AML/CFT and sanctions laws. Emerging digital identity tools, including tokenized credentials, offline verification methods, and Zero Knowledge Proofs, offer potential solutions but require clearer regulatory guidance. Treasury is encouraged to evaluate these technologies in coordination with NIST and issue a Request for Information (RFI) to gather industry input and inform future guidance.[22]
Taxation
The Report makes several proposals on the U.S. tax treatment of digital assets. First the Report recommends that the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) release guidance addressing how financial accounting and unrealized gains for digital assets should be treated for purposes of calculating the corporate alternative minimum tax (CAMT).[23] Second, the report requests Treasury and the IRS to publish guidance on whether a trust that engages in staking activities can qualify as an investment trust.[24] Third, the Report requests that Treasury and the IRS issue guidance clarifying whether so-called wrapping and unwrapping transactions (which convert a digital asset from its native blockchain to another blockchain) are taxable events.[25]
The Report also makes other legislative recommendations on the taxation of digital assets. It calls for legislation to treat digital assets as a new class of assets subject to modified tax rules (akin to securities or commodities for tax purposes).[26] It recommends clarifications on the tax treatment of stablecoin transactions, digital asset lending, and the extent to which wash sale rules and mark-to-market rules apply to digital assets. Finally, the Report makes various suggestions relating to the reporting of digital assets, including potentially extending foreign financial account reporting to digital asset accounts that are maintained outside of the U.S. by foreign digital asset service providers.[27]
Cybersecurity and Privacy
The Report highlights growing national security concerns over cybersecurity risks in the digital asset sector, citing a surge in attacks particularly by DPRK actors (including a $1.5 billion theft earlier this year).[28] The Report identifies digital asset custodians and smart contract infrastructure as particularly high-risk cybersecurity areas.[29]
The Report stressed the importance for digital asset custodians to defend against cyber threats, including phishing and social engineering tactics.[30] The Report identified several example mitigation measures, including comprehensive policies and controls over information systems that are informed by risk assessments covering asset inventories, device security, identity and access management, and monitoring.[31] The Report also highlighted privileged access restrictions, digital identity tools for the protection of private keys and digital assets accounts, and multi-factor authentication (MFA) (including protection against MFA interception techniques) as additional mitigation measures.[32] While the recommendations were focused on digital asset firms, the Report emphasized that other digital asset participants that aggregate funds, including cross-chain bridges and unhosted wallet addresses, may also be targets.[33] The Report further notes that smart contract infrastructure vulnerabilities require secure development protocols, third-party auditing, vetted libraries, ongoing threat and vulnerability monitoring, and emergency stop mechanisms.[34]
The Report urges agencies such as Treasury, the SEC, and CFTC to adopt principles-based cybersecurity standards for digital asset firms that may be adopted as part of a regulatory framework or industry best practices. It emphasizes that any such standard should take into account the activities and related risks of various industry participants and the existing National Institute of Standards and Technology (NIST) cybersecurity frameworks.[35] The Report encouraged relevant agencies to consider measures to increase cybersecurity threat information sharing between the public and private sector, including a recommendation for the Treasury’s Office of Cybersecurity and Critical Infrastructure Protection to expand information sharing via the Automated Threat Information Feed and address resilience gaps through public-private collaboration.[36]
The Report emphasizes the importance of allowing individuals to transact privately on public blockchains, while also highlighting the privacy risks, such as the potential to infer or expose personal information through public blockchain networks.[37] The Report encourages the use of self-custody and privacy-enhancing technologies to mitigate these risks.[38] However, it emphasizes that users may not be able to remain truly pseudonymous to all actors in the ecosystem, as certain entities, such as financial intermediaries subject to legal obligations under the Bank Secrecy Act, are required to collect and maintain identifying information about transaction participants.[39] The Report directs Treasury to consider coordinating with NIST and other agencies to implement customer identification in digital assets, incorporate lessons learned from relevant projects, and assess the digital asset ecosystem to inform customer identification approaches.[40]
Conclusion
The Report fundamentally rethinks how digital assets should be treated by federal regulations and laws across a wide landscape, drawing clear comparisons between the approaches of the current and prior administration. U.S. Treasury and federal regulators are expected to move quickly to implement the Report’s wide-ranging recommendations, including implementing rules following the recent enactment of The GENIUS Act. Congress is expected to pass additional legislation related to digital assets, such as the proposed Digital Asset Clarity Act of 2025.
[1] See Strengthening American Leadership in Digital Financial Technology (July 30, 2025).
[2] Id. at 29.
[3] Id. at 6.
[4] Id. at 45.
[5] Id.
[6] Id. at 46.
[7] See Acting Chairman Pham Announces CFTC Crypto Sprint (August 1, 2025).
[8] See American Leadership in the Digital Finance Revolution (July 31, 2025).
[9] Strengthening American Leadership in Digital Financial Technology at 63.
[10] Id. at 73.
[11] Id. at 60 and 72.
[12] Id. at 79–80 and 82–83.
[13] Id. at 7 and 33.
[14] Id. at 78.
[15] Id. at 88.
[16] Id. at 95.
[17] Id. at 100.
[18] Id.
[19] Id. at 102.
[20] Id. at 109–110.
[21] Id. at 115–118.
[22] Id. at 111–113.
[23] Id. at 126.
[24] Id. at 127.
[25] Id.
[26] Id. at 129.
[27] Id. at 131–135.
[28] Id. at 120.
[29] Id. at 121–122.
[30] Id. at 121.
[31] Id.
[32] Id.
[33] Id.
[34] Id. at 122.
[35] Id. at 159.
[36] Id. at 121.
[37] Id. at 38.
[38] Id.
[39] Id.
[40] Id. at 113.
