Policy Objectives and Priorities
The Report, critical of the prior Administration’s “regulatory overreach”, sets forth a clear policy framework to support the responsible growth and use of digital assets and blockchain technology across all sectors of the U.S. economy and identifies five core priorities:
- Protecting Lawful Access and Use: Affirming the right of individuals and private-sector entities to access, use, and self-custody digital assets for lawful purposes, including the development and deployment of software, mining, validating, and peer-to-peer transactions.
- Promoting U.S. Dollar Sovereignty: Advancing the development and global adoption of lawful, dollar-backed stablecoins to reinforce the primacy of the U.S. dollar in digital payments and capital markets.
- Ensuring Fair Access to Banking: Mandating fair and open access to banking services for all lawful businesses and individuals, regardless of industry.
Providing Regulatory Clarity and Certainty: Committing to technology-neutral regulations, transparent decision-making, and well-defined regulatory boundaries to foster innovation and a vibrant digital economy. - Opposing CBDCs: Explicitly prohibiting the establishment, issuance, or use of a central bank digital currency (“CBDC”) within the United States, citing concerns over financial stability, privacy, and national sovereignty.
Key Themes and Corresponding Recommendations
The Report, in its six key chapters (i.e., Chapters II-VII), recognizes the transformative potential of digital assets and blockchain technology for the U.S. financial system and the broader economy and advocates for:
- A pro-innovation regulatory environment that supports lawful digital asset use and entrepreneurship;
- Clear, fit-for-purpose regulatory frameworks for digital asset markets, banking, and payments;
- The promotion of U.S. dollar-backed stablecoins to reinforce the dollar’s global role while explicitly prohibiting the establishment, issuance, or use of a CBDC within the United States;
- Robust measures to counter illicit finance and ensure effective anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) controls; and
- Modernized tax policy and guidance tailored to the unique characteristics of digital assets.
Below is an overview of these six chapters along with the key recommendations thereof.
A. Digital Asset Ecosystem: Market Trends and Market Participants
The Report details the rapid growth of the digital asset ecosystem, which now supports trillions of dollars in payments and trades. Key market participants include issuers, retail and institutional investors, centralized and decentralized trading platforms, protocol developers, and infrastructure providers. The Report notes that the U.S. has historically been a leader in blockchain development, but regulatory uncertainty and enforcement-driven approaches have driven some innovation offshore. Accordingly, the Report calls for reversing this trend through regulatory clarity and support for domestic development.
B. Regulatory Framework: Market Structure and Taxonomy
A central recommendation of the Report is the establishment of a clear taxonomy for digital assets, distinguishing among security tokens, commodity tokens, and tokens for commercial and consumer use. Key recommendations include:
- SEC and CFTC Coordination: The Securities and Exchange Commission (the “SEC”) and the Commodity Futures Trading Commission (the “CFTC”) should use existing authorities to enable trading of digital assets at the federal level, with Congress granting the CFTC clear authority over spot markets in non-security digital assets;
- Fit-for-Purpose Exemptions and Safe Harbors: The SEC should establish tailored exemptions and safe harbors for digital asset offerings, airdrops, and decentralized network development;
- Promote Lawful Peer-to-Peer Transactions: Protect Americans’ rights to self-custody digital assets and to engage in lawful peer-to-peer transactions;
- Bundled Services and Portfolio Margining: Registrants should be permitted to offer a broad range of digital asset and traditional products under efficient licensing structures, with clear rules for portfolio margining and asset segregation.
- Preemption of State Law: Federal law should preempt state securities and commodities laws for SEC- and CFTC-registered intermediaries to reduce regulatory fragmentation.
The Report encourages the SEC and CFTC to use their existing authority to provide immediate regulatory clarity, including exemptions and safe harbors for digital asset offerings, trading, and custody.
C. Banking and Digital Assets
The report emphasizes the need for technology-neutral banking regulation, which could allow banks to determine their product and service mix based on risk management and business strategy. Key recommendations include:
End of “Operation Choke Point 2.0”: The Administration has rescinded prior efforts to deny banking services to lawful crypto businesses, reaffirming that banks may engage in digital asset activities and encouraging the use of blockchain to improve financial services;
Guidance and Parity: Agencies are urged to clarify permissible digital asset activities for banks (including custody, tokenization, and use of permissionless blockchains), ensure parity across charter types, and provide transparent processes for obtaining bank charters and Federal Reserve Bank master accounts;
Capital Treatment: The U.S. should adopt risk-based capital requirements for bank digital asset activities, aligned with international standards but tailored to U.S. market realities.
D. Stablecoins and Payments
The Report identifies U.S. dollar-backed stablecoins as a critical innovation for payments and dollar competitiveness and includes the following key recommendations:
- Implementation of the GENIUS Act: The Report asks the agencies to “faithfully and expeditiously” implement the GENIUS Act, which is highlighted as a foundational step, establishing:
- High-quality, liquid reserve requirements for payment stablecoins;
- A federal licensing regime for stablecoin issuers, with reciprocity for comparable foreign regimes;
- Clear treatment of stablecoins as neither securities nor commodities, enabling their use in payments;
- Robust consumer protections, including redemption rights and segregation of reserves; and
- Explicit application of AML/CFT obligations to stablecoin issuers.
- Promoting International Leadership: U.S. agencies are directed to promote American leadership in cross-border payments and the establishment of international standards for digital asset payments.
- Prohibition and Policy Opposition on CBDCs: The Administration opposes any U.S. CBDC, supporting legislation to prohibit its adoption and urging other countries to favor private sector-led payment innovations. By explicitly rejecting a CBDC and prioritizing private-sector stablecoin development, the U.S. is distinguishing itself from jurisdictions like the EU and China, betting instead on market-led innovation as a geopolitical lever in digital payments.
E. Countering Illicit Finance
While acknowledging that the majority of digital asset activity is legitimate, the Report addresses the risks of money laundering, terrorist financing, and sanctions evasion and made the following recommendations:
- AML/CFT and Sanctions Frameworks
- Tailored Regulation: The Bank Secrecy Act (the “BSA”) and AML/CFT frameworks should be updated to account for digital asset-specific risks and actors, with clear obligations and respect for privacy rights.
- FinCEN Guidance: The Financial Crimes Enforcement Network (“FinCEN”) should review and update digital asset guidance, including by rescinding prior proposals on unhosted wallets and travel rules.
- Information Sharing: Enhanced information sharing between the public and private sectors, including through FinCEN’s 314(a) and 314(b) programs and the Illicit Virtual Asset Notification (IVAN) platform.
- Modernization of Law Enforcement and Victim Protection
- Focus on Bad Actors: The Department of Justice will prioritize prosecuting criminal misuse of digital assets, ending “regulation by prosecution.”
- Asset Forfeiture and Victim Compensation: Regulations should be updated to enhance victim compensation in digital asset-related crimes and streamline asset recovery.
- Cybersecurity: Agencies are directed to develop principles-based cybersecurity standards for digital asset firms and increase information sharing on cyber threats.
F. Taxation
The Report calls for modernizing federal tax policy to address longstanding uncertainties and support innovation. Key recommendations include:
- Adding Regulatory Clarity: The report calls for legislative and regulatory action to:
- Add digital assets to wash sale rules and securities loan provisions;
- Amend legislation to treat digital assets as a new class of assets subject to modified versions of tax rules applicable to securities or commodities, with modified rules for actively traded fungible digital assets;
- Address the tax treatment of wrapping/unwrapping, staking, mining, airdrops, and de minimis digital asset receipts; and
- Streamline and harmonize reporting requirements for digital asset transactions under the BSA and Internal Revenue Code.
- Streamlining Third-Party and International Reporting
- Centralized brokers will be required to report digital asset sales and exchanges, with phased implementation.
- The U.S. is moving toward implementation of the Crypto-Asset Reporting Framework (CARF), an international standard for tax transparency in digital asset transactions, to address cross-border tax evasion risks.
Practical Considerations for Market Participants
- Strategic Licensing Decisions: Market exchanges and custodians and other relevant market participants should evaluate whether, and how quickly, to seek SEC or CFTC registration given the Report’s push for federal licensing.
- Stablecoin Readiness: Banks and fintech companies exploring issuance or reserve services must ensure alignment with the GENIUS Act’s asset-backing, disclosure and redemption provisions, as further clarified by forthcoming rules by the Department of the Treasury (the “Treasury”).
- Capital and Liquidity Planning: Institutions holding tokenized assets or accepting digital-asset collateral should model alternative Basel “Group 1” treatments and prepare comment letters advocating risk-sensitive calibrations.
- AML/CFT Enhancements: Compliance teams should anticipate more granular wallet-screening and information-sharing obligations, particularly for mixing services, and revisit policies on self-custody interactions.
- Tax Accounting Updates: Corporates subject to the CAMF should monitor the Treasury’s and the IRS’s “adjusted financial statement income” (AFSI). All businesses receiving digital asset payments above USD 10,000 should track forthcoming Form 8300 amendments.
Conclusions and Looking to the Future
The Report marks a decisive inflection point: the federal government is pivoting from caution to active promotion of digital-asset innovation, paired with a demand for responsible risk management. Market participants should expect a multi-year rulemaking by the SEC, the CFTC, the Treasury and the federal banking agencies, with congressional action likely later this year.
In particular, market participants should expect:
- Accelerated regulatory clarity and harmonization at the federal level.
- Expanded opportunities for lawful digital asset activities in banking and payments.
- Enhanced compliance expectations, particularly in AML/CFT and tax reporting.
- A strong policy stance against CBDCs and in favor of private sector-led innovation.
- Ongoing engagement with international standards and best practices.
While the Report is squarely focused on U.S. policy, its effects will likely ripple globally. Entities operating across borders should anticipate shifts in global AML harmonization (e.g., via FATF), competitive stablecoin frameworks, and cross-jurisdictional tax reporting, particularly if the U.S. becomes a first mover in regulating digital asset banking.
Businesses that engage early—with comment letters, pilot programs and compliance upgrades—will be best positioned to capitalize on the forthcoming regulatory architecture and this re-energized digital-finance agenda.
Please contact any member of our Fintech & Digital Assets team with questions concerning the Report or its potential impact on your operations.
