On July 30th, 2025, a comprehensive evaluation of digital financial technology was unveiled by the White House in a 166-page document entitled “Strengthening American Leadership in Digital Financial Technology” (referred to as “the Report”).[1] The Report, crafted by a collaborative team of cabinet members and agency executives, champions the growth of U.S. digital asset marketplaces. It advocates for moving away from “regulation through enforcement,” instead prioritizing enforcement efforts against serious criminal activities such as terrorism and drug trafficking. The document also proposes significant reforms to banking regulations and tax policies. It identifies key regulatory bodies overseeing digital assets and marks the most extensive set of financial law recommendations from the Executive Branch since the passage of the Dodd-Frank Act.
Digital Asset Market Structure: The SEC and CFTC
Echoing the stance of previous administrations, the Report acknowledges both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) as the primary regulators for secondary digital asset markets.[2] However, the Report voices concern about past reliance on enforcement actions as the main tool for regulating digital assets, suggesting that establishing a formal regulatory framework would be a better approach. It urges the SEC and CFTC to utilize their existing legal powers to facilitate digital asset trading at the federal level.[3]
The Report offers a proposed categorization system, sorting digital assets into three distinct groups:[4]
- Security Tokens: Digital assets classified as securities, often representing equity, bonds, security-based swaps, or investment contracts. The Report explicitly mentions tokenized securities as part of this category.
- Commodity Tokens: Digital assets that do not meet the definition of security tokens (assets that are not classified as securities). This category encompasses network tokens linked to decentralized network or protocol operations, with Bitcoin and Ether serving as examples.
- Tokens for Commercial and Consumer Use: Digital assets employed to access specific goods, services, or privileges, and are regulated under laws governing commercial transactions. This group includes non-fungible tokens (NFTs) representing identity credentials or event passes.
Regarding security tokens, the Report affirms that existing regulations, particularly the Securities Act of 1933, apply to them. This includes tokens considered “investment contracts” under the Supreme Court’s 1946 Howey test, which has been widely used by the SEC, state regulators, and federal and state courts to determine if a digital asset is a security.[5] The Report also recognizes that any intermediary acting as a broker or dealer in digital assets that qualify as securities must register with the SEC and adhere to SEC oversight.[6]
To promote regulatory clarity for digital assets, the Report suggests that the SEC and CFTC utilize their rulemaking and exemption authority to address issues such as registration, custody, trading, and record-keeping. The Report also highlights the importance of coordination between the SEC and CFTC during any rulemaking activities. On August 1, 2025, Acting Chairman of the CFTC, Caroline D. Pham, announced a “crypto sprint” to begin implementing the Report’s recommendations.[7] Similarly, SEC Chairman Paul S. Atkins unveiled “Project Crypto” on July 31, 2025, a Commission-wide effort to modernize securities regulations to facilitate the integration of financial markets with blockchain technology, aiming to rapidly implement the Report’s proposals.[8]
Specific recommendations include the SEC creating a “fit-for-purpose” exemption for offerings under Securities Act Section 5 and establishing appropriately tailored registration regimes for trading platforms, brokers-dealers, custodians, and other related market participants. It also calls for disclosure requirements tailored to digital assets’ unique traits. The Report emphasizes revisions to permit bundling trading and custody or exchange and broker services, enabling the creation of “super apps.” Clearer delineation between SEC and CFTC jurisdictions is encouraged, and the Report suggests Congress grant both agencies more regulatory authority when necessary.
Banking and Digital Assets
The Report indicates a clear departure from the federal banking agencies’ (FBAs) digital asset approach under the Biden administration, which leaned toward caution. In contrast, the Trump administration’s FBAs have rescinded previous guidance and issued statements acknowledging the permissibility of certain digital asset activities.[9]
The Report urges regulators to provide greater clarity concerning the scope of permissible digital asset activities and supervisory expectations for federally chartered, state-chartered banks, and credit unions, specifically regarding:[10]
(i) Custody of digital assets (including guidelines on technical best practices),
(ii) Use of third-party custodians,
(iii) Holding stablecoin reserves,
(iv) Holding digital assets on balance sheets,
(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 emphasizes the importance of adopting a technology-neutral perspective in adapting the existing banking regulatory framework. Technological advancements should not inherently alter the risk profile of an activity, ensuring that similar business practices with similar risks are governed by the same rules.[11]
The Report underscores the need for clear capital treatment guidelines for digital asset exposures in risk-based capital frameworks for banks and credit unions. It generally recommends that the FBAs and the U.S. Department of the Treasury advocate for modernizing the international Basel Committee on Banking Supervision (BCBS) standards to (i) integrate new data on digital asset market performance, associated risks, and recent innovations in distributed ledger technology, and (ii) re-evaluate the calibration of prudential standards since the initial publication of the BCBS standards.[12]
Beyond a more clearly defined regulatory framework for banks and credit unions, the Report champions transparency regarding the process for eligible institutions to obtain a bank charter or a Federal Reserve master account, thus enabling access to payment services.[13] This effort requires the FBAs to clarify and codify the expected timelines for decision-making on completed applications for charter licensing (including federal deposit insurance, where relevant) and requesting a Reserve Bank master account. 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 emphasizes recent legislation concerning stablecoins—namely the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, enacted on July 18, 2025—and encourages its implementation. The aim is to clarify the regulatory framework for stablecoin issuers licensed in the U.S., foster innovation and competition, reduce financial system risks, and protect consumers.[15] The Report also discusses the potential of U.S. dollar-backed stablecoins to bolster the dollar’s competitiveness in international payments and financial transactions. The Report’s primary recommendation is the prompt and faithful implementation of the GENIUS Act.
Moreover, consistent with a previous Executive Order, the Report suggests prohibiting Central Bank Digital Currencies within the United States.[16]
Countering Illicit Finance
Acknowledging the ongoing need to deter malicious actors in the digital asset space, the Report advocates for balancing law enforcement measures with innovation to safeguard the financial system from misuse. It proposes a revised enforcement strategy, with the Department of Justice (DOJ) focusing on prosecuting individuals exploiting digital assets for illicit activities such as terrorism, drug and human trafficking, organized crime, hacking, and cartel financing, while also addressing the victimization of digital asset users.[17] The Report generally recommends enhancing existing statutory frameworks to better encompass digital assets.[18] However, it leaves open the question of how to reconcile Decentralized Finance (DeFi) with anti-money laundering requirements, urging the Treasury Department to explore potential solutions.
The Report emphasizes the significance of an effective anti-money laundering framework for digital assets.[19] While recognizing the growing misuse of digital assets, it also acknowledges that crimes within this area remain a relatively small percentage of overall activity. To enhance protections, the Report recommends updating the anti-money laundering and countering the financing of terrorism (AML/CFT) framework by clarifying definitions for Money Service Businesses related to digital assets. It calls for FinCEN to modernize Suspicious Activity Reports to encompass digital asset activity and align this with IRS Form 8300.[20] Additional updates to Section 311 of the USA PATRIOT Act are recommended to include digital assets as “certain transmittals of funds,” along with revisions to the anti-tip off provision 18 U.S.C. § 1510 and modifications to 18 U.S.C. § 984.[21]
The Report asserts that while individuals should have the ability to conduct private transactions on public blockchains, regulated intermediaries must still identify customers, report suspicious activity, and block transactions as mandated by AML/CFT and sanctions laws. Emerging digital identity tools, such as tokenized credentials, offline verification methods, and Zero Knowledge Proofs, offer potential solutions but require clearer regulatory guidance. The Treasury is encouraged to assess these technologies in collaboration with NIST and issue a Request for Information (RFI) to gather industry insights and guide future regulations.[22]
Taxation
The Report proposes several changes regarding the U.S. tax treatment of digital assets. Firstly, it advises the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) to release guidance clarifying how financial accounting and unrealized gains for digital assets should be treated when calculating the corporate alternative minimum tax (CAMT).[23] Secondly, it requests guidance on whether a trust involved in staking activities can be considered an investment trust.[24] Thirdly, the Report requests Treasury and the IRS to issue guidance clarifying whether “wrapping and unwrapping” transactions (converting a digital asset from its native blockchain to another) are taxable events.[25]
The Report also includes legislative recommendations on digital asset taxation. It suggests legislation to classify digital assets as a new asset class subject to modified tax rules, similar to those for securities or commodities.[26] Clarifications are recommended for the tax treatment of stablecoin transactions, digital asset lending, and the applicability of wash sale and mark-to-market rules to digital assets. Finally, the Report offers various suggestions related to digital asset reporting, potentially extending foreign financial account reporting to digital asset accounts held outside the U.S. by foreign service providers.[27]
Cybersecurity and Privacy
The Report underscores growing national security concerns stemming from cybersecurity risks within the digital asset sector, citing a surge in attacks, particularly by DPRK actors (including a $1.5 billion theft earlier this year).[28] It identifies digital asset custodians and smart contract infrastructure as particularly high-risk areas.[29]
The Report stresses the importance of digital asset custodians protecting against cyber threats, including phishing and social engineering tactics.[30] Several mitigation measures are suggested, including comprehensive policies and controls over information systems informed by risk assessments covering asset inventories, device security, identity and access management, and monitoring.[31] Restrictions on privileged access, digital identity tools for protecting private keys and digital asset accounts, and multi-factor authentication (MFA) (including defenses against MFA interception techniques) are also highlighted as additional mitigation measures.[32] While aimed at digital asset firms, the recommendations extend to other participants aggregating funds, such as cross-chain bridges and unhosted wallet addresses.[33] The Report emphasizes that smart contract infrastructure vulnerabilities necessitate 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, potentially integrated into regulatory frameworks or industry best practices. These standards should consider the activities, associated risks of various industry participants, and existing National Institute of Standards and Technology (NIST) cybersecurity frameworks.[35] Relevant agencies are encouraged to enhance cybersecurity threat information sharing between the public and private sectors, including expanding information sharing via the Automated Threat Information Feed and addressing resilience gaps through public-private collaboration, as suggested for Treasury’s Office of Cybersecurity and Critical Infrastructure Protection.[36]
The Report emphasizes the importance of individual privacy in transactions on public blockchains, while also highlighting associated risks, such as potentially exposing personal information through these networks.[37] The Report encourages self-custody and privacy-enhancing technologies to mitigate these risks.[38] However, it notes that users may not remain entirely anonymous to all ecosystem participants, as entities like financial intermediaries under the Bank Secrecy Act must collect and maintain identifying information about transaction participants.[39] Treasury is directed to consider coordinating with NIST and other agencies to implement customer identification in digital assets, incorporating lessons from relevant projects and assessing the digital asset ecosystem to inform customer identification approaches.[40]
Conclusion
The Report fundamentally re-evaluates how digital assets should be treated under federal regulations and laws, drawing clear distinctions between current and previous administration approaches. The U.S. Treasury and federal regulators are expected to swiftly implement the Report’s wide-ranging recommendations, including enacting rules following The GENIUS Act. Congress is anticipated to pass additional legislation concerning 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.