The President’s Working Group on Digital Asset Markets on July 30 released Strengthening American Leadership in Digital Financial Technology. This report, issued under January's Executive Order 14178, outlines a sweeping set of recommendations for the regulation of digital assets and blockchain technology in the United States. Below, we answer key questions about the report’s implications for businesses, financial institutions and investors.
Why Was the Report Issued, and What Does It Prioritize?
The report fulfills the working group’s mandate to recommend regulatory and legislative proposals to foster the responsible growth of digital assets and blockchain technologies. It does not immediately change the regulation of digital assets, but key federal agencies are likely to act on recommendations that do not require legislative changes. Its priorities include:
- Protecting the right of individuals and businesses to use open blockchain networks and self-custody digital assets.
- Promoting the global role of the U.S. dollar through support for stablecoins.
- Prohibiting the development or adoption of central bank digital currencies (CBDCs) in the United States.
- Providing legal clarity for digital asset ownership, use and self-custody.
- Ensuring fair, technology-neutral treatment of digital asset businesses by banks and regulators.
- Supporting U.S. leadership in digital asset innovation, payments and anti-illicit finance.
How Does the Report Recommend Structuring Digital Asset Markets?
The report proposes a three-category taxonomy for digital assets:
- Security tokens regulated by the SEC
- Commodity tokens regulated by the CFTC
- Commercial/consumer use tokens such as stablecoins and utility tokens
This taxonomy is intended to reduce regulatory overlap and arbitrage. The report also recommends:
- Special exemptions from securities registration for digital asset distributions, including safe harbors for new projects that are not yet fully functional or decentralized.
- Allowing non-security digital assets linked to investment contracts to trade on non-SEC platforms immediately after issuance.
- Relief for certain decentralized finance (DeFi) service providers from broker-dealer, exchange and clearing agency registration requirements.
- Modernizing definitions and rules for exchanges, transfer agents and self-hosted wallet providers.
- Coordinated SEC and CFTC rulemaking, including the creation of regulatory sandboxes and clear pathways for innovation.
What Immediate Actions Does the Report Recommend for Market Participants and Regulators?
Immediate recommendations include:
- Securities Offerings Relief: Create exemptions from registration for digital asset offerings, including safe harbors for early-stage projects and clear rules for airdrops and decentralized network rewards.
- Trading and Registration Relief: Permit trading of non-security digital assets on non-SEC platforms post-issuance and provide DeFi service providers relief from certain registration requirements.
- Modernized Market Rules: Update the definition of “exchange facility,” support tokenized securities and digital assets, modernize transfer agent rules, and clarify when wallet providers must register as broker-dealers.
- Custody Rules: Clarify how investment firms and advisers can safely hold digital assets that are securities, and whether state-chartered trusts can act as qualified custodians or banks.
- Commodity Exchange Act Guidance: The CFTC should clarify how digital assets are classified and traded as commodities, including rules for leveraged trades, “actual delivery” and customer identification. The CFTC should also clarify requirements for commodity pool operators and how its rules apply to DeFi, smart contracts and decentralized autonomous organizations (DAOs).
How Does the Report Address Coordination Between the SEC and CFTC?
The report urges the SEC and CFTC to:
- Coordinate on rulemaking and public comment processes.
- Establish regulatory sandboxes or safe harbors with clear eligibility criteria and exit pathways.
- Consider creating a special category for certain qualified participants to trade digital asset derivatives through regulated intermediaries.
What Are the Longer-Term Recommendations for Digital Asset Market Structure?
Longer-term recommendations include:
- Single User Interface: Allowing digital asset companies to offer trading, custody and brokerage under one roof, with strong safeguards and clear disclosures.
- Blockchain Derivatives: Updating CFTC rules to enable blockchain-based derivatives, including requirements for clearing, reporting and margin, even in non-intermediated environments.
- Regulatory Action Without Congress: If Congress does not act, the SEC and CFTC should use existing authority to provide regulatory clarity and support responsible innovation.
What Does the Report Say About Market Structure Legislation?
The report highlights the Digital Asset Market Clarity Act of 2025 (CLARITY) as a foundation for market structure, splitting oversight between the SEC and CFTC, protecting self-custody rights, and supporting efficient trading and DeFi. The report urges Congress to ensure federal law preempts state law for SEC- and CFTC-registered firms and to provide clear, efficient licensing and reporting rules for digital asset intermediaries.
How Does the Report Address DeFi and Innovation?
The report recommends:
- Regulation based on the actual control over assets, the ability to modify software and the degree of centralization.
- Tailored rules for DeFi that reflect its unique features, rather than applying traditional financial regulations by default.
- Preventing abuse by ensuring products cannot be structured solely to avoid legal responsibilities.
What Are the Key Accounting Recommendations?
The Financial Accounting Standards Board (FASB) has issued guidance on measuring digital assets at fair value. The report recommends that FASB seek further input on:
- When to recognize or remove digital assets from balance sheets.
- How to account for tokens created and issued by companies.
- Whether stablecoins should be treated as cash equivalents.
- How to account for tokens that provide utility or access but lack clear legal rights. The report notes the need for updated accounting and audit standards as digital asset use grows.
What Changes Does the Report Recommend for Banks and Digital Asset Activities?
The report calls for:
- Clear guidance on permissible digital asset activities for banks, including custody, use of third-party providers, holding stablecoin reserves and participating in pilots.
- Fair treatment for all types of banks, with technology-neutral supervision.
- Transparent, timely processes for obtaining charters, insurance and Reserve Bank master accounts, with automatic approval if deadlines are missed (absent extraordinary circumstances).
- Risk-based capital and liquidity requirements for digital asset activities, aligned with international standards.
- Removal of outdated restrictions on state-chartered banks and consistent examiner training.
What Does the Report Say About Stablecoins and Payments?
The report supports the GENIUS Act, which:
- Requires U.S. dollar-backed stablecoins to be fully backed by high-quality, liquid assets and redeemable 1:1 for cash.
- Mandates monthly reserve disclosures and prohibits misleading claims about government backing.
- Requires stablecoin issuers to be licensed in the United States or meet comparable foreign standards.
- Prioritizes stablecoin holders’ claims in insolvency and requires custodians to segregate reserves.
- Clarifies that U.S.-licensed payment stablecoins are not securities or commodities.
- Imposes strong AML/CFT and sanctions requirements on issuers, including foreign issuers with U.S. customers.
- Encourages competition and innovation in payments, while banning government-issued CBDCs and focusing on private sector solutions.
How Does the Report Address Illicit Finance?
The report urges:
- Fast implementation of the GENIUS Act’s AML rules for stablecoin issuers.
- Updated FinCEN guidance for digital assets, including new categories for digital asset financial institutions.
- Legislation to clarify the circumstances in which U.S. AML rules apply to foreign-located actors.
- Ensuring Americans’ right to self-custody digital assets and clarifying that software providers without full control are not money transmitters.
- Improved information sharing between digital asset and traditional financial institutions, and greater participation in FinCEN’s information sharing programs.
- New rules allowing the Treasury to block or condition certain digital asset transfers linked to illicit actors, even outside traditional banking.
- Updated victim compensation and asset-forfeiture laws to address digital assets and expanded anti-tipping off and theft laws to cover digital asset businesses.
- Flexible, principles-based cybersecurity standards and improved sharing of cyber threat information.
What Are the Key Tax Recommendations?
The report recommends:
- Guidance on how digital asset transactions are taxed, including staking, mining and wrapping.
- Treating digital assets as a separate asset class for tax purposes, with rules similar to those for stocks or commodities.
- Clarifying the tax treatment of stablecoins, including whether they should be treated as debt, and addressing wash sale and anti-bearer bond rules.
- Applying wash sale rules to digital assets (except stablecoins) and updating broker reporting requirements.
- Allowing loans of actively traded digital assets to be treated like securities loans.
- Guidance for small digital asset receipts (airdrops, staking, mining) and updated rules for the timing of income from mining and staking.
- Requiring reporting of foreign digital asset accounts and streamlining reporting forms for the IRS and FinCEN.
- Ensuring broker and business reporting rules are consistent and not overly burdensome.
Key Takeaways
The White House’s digital asset roadmap signals a shift toward clearer, more supportive regulation for digital assets and blockchain in the United States.
- Federal agencies — including Treasury, SEC, CFTC, OCC, FDIC and others — are expected to move quickly to implement the report’s recommendations.
- Congress may also consider new legislation to clarify digital asset market structure, tax treatment and anti-illicit finance measures.
Companies should review their compliance, risk management and reporting practices in light of these recommendations, and watch for further regulatory and legislative developments.
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