The White House report contains over 100 legislative recommendations and is a bellwether for cryptocurrencies.

The White House's 166-page crypto report is more than just paper! It covers token classification, tokenization, DeFi, airdrop "safe harbors," the DePIN network's digital asset distribution exemption, lending, derivatives, taxation, and more.

Original text: STRENGTHENING AMERICAN LEADERSHIP IN DIGITAL FINANCIAL TECHNOLOGY

Author: The White House

Compiled by KarenZ, Foresight News

Cover: Photo by Harold Mendoza on Unsplash

On July 31, Beijing time, the U.S. White House Presidential Task Force on Digital Asset Markets released the report "Strengthening U.S. Leadership in Digital Financial Technology."

The 166-page report covers an overview of the digital asset ecosystem, digital market structure, and the current regulatory framework. It also provides relatively clear over 100 legislative recommendations and guidance on digital asset classification, payment stablecoins, regulatory framework, taxation, etc. The core goal is to ensure the United States' global leadership in digital assets and blockchain technology, and to promote the development of a clear regulatory framework to promote innovation, protect consumers and investors, and prevent financial risks.

TL;DR

First, American citizens and businesses should be able to own digital assets and use blockchain technology for lawful purposes without fear of prosecution. Similarly, American entrepreneurs and software developers should have the freedom and regulatory certainty to use these technologies to upgrade all sectors of the American economy.

• Congress should enact legislation affirming that individuals can custody their own digital assets without a financial intermediary and use those assets for legal peer-to-peer transactions.
• Congress should codify principles governing how control of assets affects BSA obligations, particularly for money transmitters. For BSA purposes, software providers that do not maintain complete and independent control of value should not be considered to be engaged in the money transmission business.
• The Financial Crimes Enforcement Network (FinCEN) should evaluate whether and how its existing guidance related to the digital asset sector, including guidance issued in 2013 and 2019, should be revoked, modified, or updated to reflect legislative and regulatory changes. FinCEN may consider whether additional guidance is needed for specific markets or the application of specific BSA obligations.

Second, policymakers and market regulators should lay the foundation for the U.S. digital asset market to become the deepest and most liquid market in the world.

• The U.S. SEC and CFTC should use their existing authorities to immediately promote digital asset trading at the federal level.
• Congress should enact legislation granting the CFTC explicit authority to regulate spot markets for non-security digital assets. This legislation should allow registrants with both market regulators to engage in multiple lines of business under the most efficient licensing structure.
• When determining the regulation of DeFi, policymakers should fully consider the extent to which a particular software application: (i) exercises “control” over assets; (ii) is technically capable of being modified; (iii) operates with a centralized structure or management; and (iv) is technically or logistically capable of complying with current regulatory obligations.

3. Banking regulators should promote the development of digital assets and blockchain technology.

• Federal banking regulators should ensure that existing and new practices or guidance regarding risk management and bank engagement are technology-neutral.
• These regulators should relaunch their work on cryptocurrency innovation. The United States should adopt capital requirements for banks’ digital asset activities that accurately reflect the risk of the asset or activity.
• The relevant federal banking regulators should provide clarity and transparency on the process by which eligible institutions obtain a banking charter or a master account with the Reserve Bank.

4. Dollar-backed stablecoins represent the next wave of innovation in payments, and policymakers should encourage their adoption to enhance the dollar’s dominance in the digital age.

• All agencies authorized by Congress under the GENIUS Act are expected to perform their duties efficiently.
• Relevant U.S. agencies, including the Treasury Department, should promote U.S. private sector leadership in the responsible development of cross-border payments and financial market technologies. These agencies should also promote U.S. leadership in developing international legal, regulatory, and technical standards and best practices for new payment technologies that reflect U.S. interests and values.
• Relevant U.S. government agencies, including the Treasury Department, should promote private sector leadership in the responsible innovation and development of cross-border payments and financial market technologies. These agencies should also promote U.S. leadership in developing international legal, regulatory, and technical standards and best practices for new payment technologies that reflect U.S. interests and values.
• Congress should legislate to ban the adoption of any central bank digital currency (CBDC) within the U.S. Internationally, the U.S. should urge other countries to pursue policies that promote the role of the private sector in upgrading the payments and financial systems.

5. U.S. law enforcement agencies should have the necessary means and authority to hold accountable those who use digital assets to engage in illegal activities. These law enforcement tools must not be abused to target the legitimate activities of law-abiding citizens.

6. The Presidential Task Force on Digital Asset Markets is committed to resolving tax ambiguity in the digital asset sector through clear tax guidance and legislative adjustments, and balancing support for innovation with tax compliance needs.

• Specifically covers tax guidance related to token packaging, mining, staking, payment-type stablecoins, etc.
• Congress enacted legislation to treat digital assets as a new asset class and to modify the tax rules applicable to securities or commodities under federal income tax regulations, adding digital assets to the list of assets subject to wash sale rules.

Digital Asset Ecosystem Overview

The report provides an overview of the digital asset ecosystem:

Since the birth of Bitcoin in 2009, the digital asset market has grown exponentially, evolving from a niche sector into a trillion-dollar payment and transaction ecosystem.

Institutional adoption accelerates: Bitcoin spot ETF data continues to grow.

The rise of DeFi: The total locked value (TVL) of DeFi protocols will reach US$130 billion in 2025.

Various organizations, including sports clubs and video game developers, have begun experimenting with using NFTs as a symbol of loyalty to a team or in-game assets.

The report also provides an overview of the numerous market participants in the digital asset ecosystem, the DeFi technology stack, and introduces DAOs, protocol consensus mechanisms (PoW and PoS), mining, staking, key infrastructure providers and tools, etc.

Many market participants:

DeFi Technology Stack:

Critical Infrastructure Providers and Tools:

Current regulatory framework

Federal level

• U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC): The primary federal regulators of the secondary digital asset market.
• Self-regulatory organizations such as the Financial Industry Regulatory Authority (FINRA) and the National Futures Association (NFA) also help regulate and supervise certain financial industry participants.
• Bank regulators: Federal Reserve, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation, National Credit Union Administration (NCUA).
• U.S. Treasury Department: The Financial Crimes Enforcement Network (FinCEN), through the Bank Secrecy Act (BSA), requires financial institutions to submit suspicious activity reports (SARs) and cash transaction reports (CTRs) to protect the financial system from illegal activities and combat money laundering and terrorist financing; the Treasury Department's Office of Foreign Assets Control (OFAC) is the competent authority for U.S. economic sanctions; the Internal Revenue Service (IRS) is responsible for collecting taxes and providing tax-related assistance to taxpayers.

State level

Some state financial services agencies have applied state money transmitter laws to digital asset custodians and trading platforms, requiring intermediaries to register as money transmitters to serve customers located in the relevant state. Some states have exempted digital asset transactions from money transmitter laws, meaning that firms specializing in digital asset transactions may not be subject to licensing requirements. Other states have established specialized regulatory regimes for digital assets.

• New York State (NYDFS): The "BitLicense" system requires digital asset companies to obtain licenses, but it has been criticized for its lengthy process.
• Wyoming: Established a "Special Purpose Depository Institution" (SPDI) charter, recognizing The DAO as a legal entity.
• California: Special regulations on digital assets will be implemented in 2026.

Key market activities that require further clarification of regulation

The report also discusses key market activities that require further regulatory clarity, including:

• Issuance of digital assets (ICOs, airdrops, forks);
• trade;
• Custody and wallets;
• clearing and settlement;
• Loans and mortgages;
• Tokenization.

Regarding tokenization , the report cites industry estimates that over $600 billion in "real-world assets" could be tokenized by 2030. The regulatory structure for tokenization depends on the asset being tokenized, not simply the tokenization process itself. Where tokenized instruments are regulated, they tend to be regulated as securities, as a significant portion of current tokenized trading volume comes from securities-like underlying assets (such as fixed income and private credit). Other non-securities uses of tokenization include tokenizing commodities (such as gold) and non-financial assets (such as commercial real estate and rare items).

Market structure and regulatory recommendations

The report noted that since Trump took office, both the SEC and the CFTC have taken strong initial steps to provide market participants with much-needed clear information.

Establishing a digital asset taxonomy

The report breaks down digital asset classes into three categories: security tokens, commodity tokens, and commercial and consumer use tokens.

1. Security Tokens

Definition : An asset such as a stock, bond, or investment contract that meets the definition of a securities law (as determined by the Howey test).

Regulatory requirements:

• The offering must be registered with the SEC or qualify for an exemption.
• Under Section 3(a)(1) of the Securities Exchange Act and Rule 3b-16(a) of the Securities Exchange Act, any platform that meets the definition of an “exchange” and offers trading services for digital assets that are securities must either register as a national securities exchange or operate under an exemption (e.g., as an ATS).

Tokenization does not affect the substance of the issued securities, nor does the use of blockchain by the issuer or its agents create a new or different type of asset. Therefore, tokenized securities fully meet the definition of "security" under the federal securities laws, and all offers and sales of such assets require registration unless an exemption applies. The SEC has exemptions available to mitigate concerns related to the issuance and trading of tokenized securities.

2. Commodity Tokens

Definition : Digital assets (such as Bitcoin and Ethereum) that are considered "commodities" by the CFTC, and their derivatives (futures and options) are regulated by the CFTC.

Regulatory Requirements : While there's no federal framework for spot markets, the CFTC can combat fraudulent and manipulative practices. Digital asset derivatives must be listed on a Designated Contract Market (DCM) or Swap Execution Facility (SEF) and comply with CEA clearing rules. Digital asset derivatives will be cleared by a registered derivatives clearing organization (DCO), which acts as the central counterparty for every buyer and seller.

Network tokens (protocol tokens) are different from securities and generally do not confer equity, debt, or profit-sharing rights. Even if network tokens are initially issued as "investment contracts" (securities), they should no longer be considered securities once the network is fully operational and sufficiently decentralized.

3. Tokens for Commercial and Consumer Use

Definition : A token (usually an NFT) used to access specific goods, services, or benefits, or a loyalty token (which can be redeemed for consumption purposes within a closed system).

Federal regulatory proposals to promote digital asset transactions

I. Recommended Immediate Actions the SEC Should Take:

1. Utilize the rulemaking authority and exemptions under the Securities Act to promote the following measures:

• Establish a customized exemption system for securities issuance involving digital assets .
• Establish a temporary safe harbor for tokens with incomplete functionality or decentralization , allowing them to develop gradually without being subject to securities laws.
• Establish a safe harbor for certain airdrops to prevent them from being deemed a “sale” under Section 2(a)(3) of the Securities Act or exempt them from the registration requirements of Section 5 of the Securities Act. Also consider exemptions for digital asset distributions by decentralized physical infrastructure (DePIN) providers to incentivize network participation, as well as for certain NFT issuances.

2. Utilize the rulemaking authority and exemptions under the Securities Exchange Act to promote the following measures:

• Non-security digital assets (excluding payment stablecoins) linked to investment contracts are allowed to be traded on non-SEC registered trading platforms after the initial distribution is completed.
• Provides exemptions for certain DeFi service providers from the registration requirements of the Securities Exchange Act regarding broker-dealers (Section 15), exchanges (Sections 5 and 6), and clearing organizations (Section 17A).
• Amend Regulation ATS (or establish a similar framework) to better coordinate the parallel trading of non-security digital assets and securities under a regulatory framework appropriate for digital asset transactions.
• Establish a conditional "innovation exemption" under the Securities Exchange Act to allow SEC-registered entities to develop innovative business models.
• Redefine the definition of "facility" in Section 3(a)(2) of the Securities Exchange Act to adapt to the new business model of digital asset trading.
• Revise the NMS Regulations and related National Market System Plans to promote:
• Tokenization of National Market System (NMS) Securities
• Parallel trading of non-security digital assets and NMS securities
• Optimize quotation/order collection mechanisms and transaction reporting requirements
• Support the application of DeFi components such as oracles and aggregators in NMS securities or non-securities digital asset transactions
• Update transfer agent rules to explicitly allow the use of blockchain technology.
• Clarify the circumstances under which self-custodial wallet providers are required to register as broker-dealers.

3. Use the Investment Advisers Act and the Investment Company Act to promote:

• Clarify the custody requirements for securities-type digital assets by registered investment companies/investment advisors.
• Evaluate whether to include some state-chartered trust institutions in the category of “qualified custodians.”

II. Recommended Immediate Actions the CFTC Should Take

1. The CFTC should consider using its rulemaking, interpretation, and exemption powers under the Commodity Exchange Act to advance:

• Provide clear guidance for designated contract markets (DCMs) on the launch of leveraged, margined, or financed retail commodity spot trading (involving digital assets).
• Clarify the criteria for determining whether digital assets may be commodities.
• If digital asset investment vehicles or their managers may be identified as "Commodity Pools" or need to register as "Commodity Pool Operators" (CPOs), the CFTC will update the relevant rules in a timely manner.
• Collaborate with FinCEN on new rules to provide guidance to qualified intermediaries and other market participants on implementing customer identification programs (CIPs) using new technologies.
• Institutions are allowed to offer bundled trading and custody services.
• Clarify the applicability of DeFi activities, smart contract protocols, and DAOs under the existing CFTC registration framework (following the principle of technology neutrality).
• Guidance for futures commission merchants (FCMs) regarding the calculation and management of segregation obligations when administering digital asset custody.
• Clarify the valuation deduction rules for digital assets held by registered intermediaries (including FCMs, swap dealers, and derivatives clearing organizations) for margin calculations, capital and financial resource reporting, and settlement obligation fulfillment.
• Review the criteria for determining digital assets as eligible collateral under CFTC Rule 1.49.
• Developing collateralization guidelines for digital assets (including payment stablecoins) for derivatives clearing organizations (DCOs), covering:
• DCO Financial Resource Requirements
• Asset Valuation and Margin Deductions
• Finality
• Self-Hosted vs. Third-Party Hosting Processing
• 24/7 end-of-day reporting for trading assets
• Legal risks of netting and collateral interests.
• Promote the use of tokenized non-cash collateral as compliant margin.
• Clarify the classification standards for digital asset swaps, as well as their margin, reporting, and other requirements.

The SEC and CFTC should coordinate to ensure an efficient rulemaking process and solicit public comment on proposed rulemakings.

Regarding long-term planning, the SEC and CFTC should explore providing flexibility to allow registered institutions to offer multiple services within a single user interface. The CFTC should consider how to amend existing rules to allow for the use of blockchain-based derivatives.

For example, combining exchange services with custody of traded assets can enable real-time settlement. By combining exchange and brokerage services, client orders can be processed directly using the same technology stack, achieving economies of scale and reducing operational complexity. However, exchanges and intermediaries must maintain segregation of client funds from their own.

What should Congress consider when legislating on digital asset market structure?

The report states that Congress should consider the following when finalizing market structure legislation to ensure the most cost-effective and innovation-friendly regulatory structure for digital assets.

1. Division of powers and responsibilities of regulatory agencies:

• The CFTC should explicitly obtain regulatory authority over the spot market for non-securities digital assets .
• SEC- and CFTC-registered institutions can diversify their businesses within an efficient licensing framework, avoiding regulatory arbitrage. SEC-registered institutions should be able to offer trading in digital asset securities and, under a congressionally defined licensing structure, engage in trading in non-security digital assets. CFTC-registered institutions should be able to offer trading in digital commodity derivatives, retail digital commodities, and other CFTC-regulated products, as well as non-security digital assets designated by Congress.
• Federal law should preempt state law and uniformly govern the applicability of securities and commodities regulations.

2. Regulatory framework for intermediaries:

• Digital asset trading platforms, brokers, etc. need to customize registration with the SEC or CFTC based on the nature of their business, and the rules must be consistent with existing financial regulatory standards but not overly strict.
• Institutions are allowed to conduct lending, hedging and other operations on securities and non-securities assets under controllable risks.
• Digital asset trading platforms and other intermediaries should publish standards for managing digital asset listings and highlight information such as token economics .
• Digital asset trading platforms, brokers, dealers, and other institutions registered with the SEC and CFTC must disclose their roles when acting on behalf of clients, principals, or counterparties.

3. DeFi Regulatory Principles : Regulators should focus on the protocol's control over user assets, code modifiability, and centralization, avoiding imposing traditional financial rules on technical entities that fail to comply. They should encourage the development of a framework that balances innovation and security, and guard against legal circumvention when integrating DeFi into the mainstream financial system.

4. Improvement of accounting standards : The U.S. Financial Accounting Standards Board (FASB) needs to further clarify the recognition/derecognition standards for digital assets (some accounting issues that arise during lending, packaging, and trading) and accounting issues for token issuers.

Banking and Cryptocurrency

Banks currently provide a variety of services to digital asset companies by:

1. A variety of traditional banking products and services, such as business deposit accounts, loans, and capital markets advisory services;

2. Payment;

3. Tokenization;

4. Tokenized deposits;

5. Digital asset custody;

6. Promote digital asset transactions;

7. Digital asset-related lending, etc.

The report recommends:

1. Restart the Bank Encryption Innovation Support Program

1. Prioritize high-demand areas

• Expand the list of compliant digital asset businesses that banks can conduct within the legal framework.
• Ensure fairness in business authority among banks with different license types.
• Develop prudential regulatory standards for the following areas: private/public chain applications, deposit tokenization, and the entities conducting core banking business (deposit-taking institutions or holding companies).

2. The first batch of key topics

• Digital asset custody: Supplement technical best practice guidance (such as key management and isolation of hot and cold wallets).
• Third-party cooperation: It is clarified that banks can outsource digital asset services (such as sub-custody and infrastructure support).
• Stablecoin reserve management: Updating existing OCC rules in conjunction with the GENIUS Act.
• Proprietary account holdings: Defining the compliance and risk control requirements for digital assets held on bank balance sheets.
• Innovative pilot: Allow depository institutions to participate in digital asset-related experimental projects.
• Tokenization activities: Differentiated access rules are formulated based on the risk level of the underlying assets (including deposit tokenization).
• Use of public chains: Adopting the principle of technology neutrality, focusing on the actual risks of the business rather than the technology itself.

2. Encourage Technological Innovation of State Banks

• Abolition of restrictive policies:
• The Federal Reserve should revoke its 2023 Section 9(13) Policy Guidance and 12 CFR § 208.112 and supporting guidance to ensure that state member banks are permitted to explore innovative banking technologies and products.

III. Building a Principle-Based Regulatory Framework

• Standardization of risk governance
• Regulatory capacity building

Stablecoins and payments

Legislative recommendations:

• Swiftly implement the GENIUS Act: The Presidential Task Force on Digital Asset Markets urges all relevant federal agencies, including the Treasury Department, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve, the National Credit Union Bureau, the SEC, and the CFTC, to swiftly implement the GENIUS Act as required by law to promote the development of US dollar stablecoins and ensure the smooth implementation of the stablecoin regulatory framework.
• The U.S. Treasury and other agencies should support private sector leadership in cross-border payments and financial market technologies and promote international standards that are consistent with U.S. interests and values.
• Legislation should be enacted to prohibit the use of CBDCs in the United States, and other countries should be called upon to support the private sector's dominant role in payment systems .

Combating illegal financing

The report proposes a series of regulatory and policy recommendations to combat illicit financial activities, such as money laundering and terrorist financing. The specific recommendations are summarized as follows:

• Clarify the scope of application of the Bank Secrecy Act (BSA).
• Strengthen information sharing between the public and private sectors on illicit financial risks.
• The Ministry of Finance and relevant agencies need to provide clear AML/CFT compliance guidelines for traditional financial institutions and digital asset service providers, clarifying the requirements for customer identification (CIP), transaction monitoring and suspicious activity reporting (SAR).
• Combat systemic illegal financial risks.
• Protect the legitimate rights and interests of users.
• Technical standards and compliance tools.

tax

The Presidential Task Force on Digital Asset Markets is committed to resolving tax ambiguities in the digital asset sector through clear tax guidance and legislative adjustments, balancing support for innovation with tax compliance needs.

Priority guidance

The Treasury Department and the Internal Revenue Service (IRS) should issue guidance:

• Clarify how unrealized gains and losses are determined in adjusted financial statement income (AFSI) when digital assets are used as investment assets.
• Resolve whether a trust that holds digital assets, stakes those assets, and receives staking rewards can be considered an investment trust in the form of a grantor trust.
• Clarify whether digital asset “wrapping” (such as converting Bitcoin into a tokenized version on Ethereum) and “unwrapping” transactions constitute taxable events.
• Updated IRS FAQs on digital assets.
• Set tax-free thresholds for tiny income from digital assets (such as airdrops, staking rewards, and hard forks) and simplify small tax declarations (excluding node operators and digital asset mining taxpayers).

In addition, the working group will also provide guidance on relevant taxes involving mining and staking, airdrops, NFTs, digital asset losses, charitable donation deductions, etc. in the future .

Some possible legislation or guidance also includes requiring taxpayers to report foreign digital asset accounts , simplifying the reporting requirements under the Income Tax Act and the Income Tax Act, requiring the reporting of basic information when transferring digital assets between centralized digital asset exchanges, and requiring digital asset brokers to report information on foreign controlling persons of certain passive entities.

Priority legislative recommendations

• Congress should enact legislation that treats digital assets as a new class of assets subject to modified versions of the securities or commodities tax code applicable to federal income tax purposes. Code provisions applicable to actively traded fungible digital assets should be expanded to include: (a) "mark-to-market," "trading safe harbors," and "securities lending." Furthermore, Sections 1091 (wash sale rules) and 1259 (constructive sales) should also apply to digital assets. Alternatively, legislation could clarify when digital asset commodities or other digital assets are treated as securities or commodities for federal income tax purposes.
• Legislation should be enacted to characterize payment stablecoins for federal income tax purposes , an issue not addressed by the GENUS Act. Given how payment stablecoins are structured and the potential gains or losses upon their disposal, characterizing them as debt appears most appropriate. If payment stablecoins are treated as debt, legislation should also consider the applicability of existing federal income tax rules, which could hinder the widespread use of payment stablecoins as financial assets. In particular, legislation should address wash sale and anti-bearer bond rules.
• Amend the wash sale rules to add digital assets to the list of assets subject to the wash sale rules. If such legislation is enacted, broker reporting regulations should be amended to reflect these changes to the wash sale rules. The wash sale rules should not apply to payment stablecoins.
• It is clarified that digital asset lending is subject to tax treatment similar to securities lending.

US Bitcoin Strategic Reserve and Digital Asset Hoarding

Regarding the U.S. Strategic Bitcoin Reserve and digital asset hoarding, the U.S. Treasury Department has submitted its recommendations to the White House regarding the establishment and management of the Strategic Bitcoin Reserve and Digital Asset Stockpile. The Treasury Department will continue to coordinate with the White House and other members of the working group to advance appropriate follow-up measures to implement the operation of the reserve and stockpile.

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