A Digital Assets Revolution? White House Report Outlines a Realignment in Federal Regulatory Policy

The Report outlines a comprehensive policy agenda for digital assets, proposing regulatory and legislative reforms across a broad array of federal agencies. It aims to promote innovation, protect consumers, ensure financial stability and reaffirm the global role of the U.S. financial system. The report sets forth specific proposals for market regulators such as the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC), banking supervisors such as the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Federal Reserve, and other financial regulatory bodies including the Department of the Treasury and the National Credit Union Administration (NCUA). While the report assumes that federal agencies have the authority to implement many of its recommendations, additional legislation will be required for certain of its recommendations, such as expanding CFTC authority over spot markets in digital assets, creating new statutory definitions for asset classes, and codifying safe harbors or tax treatments.

The Report presents not only a domestic policy realignment, but also a strategic vision for reasserting U.S. leadership in the global digital asset economy. As major financial centers, including the EU, UK, Singapore and Japan, finalize and implement their own regulatory regimes, the U.S. faces a narrowing window to shape global standards and secure its position as the preferred jurisdiction for compliant digital asset activity. The Report calls for the development of a robust domestic framework that can serve as both a model and a benchmark in international forums. The Report argues that without such leadership, regulatory fragmentation may leave U.S. firms at a competitive disadvantage and allow less accountable jurisdictions to set the terms of innovation.

While this paper addresses many of the Report’s core recommendations, particularly those related to market structure, securities and commodities regulation, and banking, it does not cover all the issues raised in the Report. Topics such as tax policy, privacy, and technical standards are beyond the scope of this paper. A separate white paper addressing the Report’s tax-related proposals can be accessed through this link.

The Overarching Policy Vision of the White House Report
The Report opens with a broad and assertive policy vision grounded in individual rights, market liberalization, and technological leadership. Among its core principles are that:

• Individuals should have the right to own and use digital assets and interact with public blockchains for lawful purposes without fear of prosecution. Congress should affirm this right and protect self-custody and peer-to-peer transactions.
• Software developers and innovators should not be regulated as financial intermediaries unless they exercise full control over customer funds. The Report urges Congress and the Financial Crimes Enforcement Network to modernize the Bank Secrecy Act framework accordingly.
• The SEC and CFTC should use their existing exemptive and rulemaking authorities to facilitate digital asset trading at the federal level, and Congress should give the CFTC clear jurisdiction over spot markets in non-security digital assets.
• Decentralized Finance (DeFi) should be embraced by regulators, with attention to factors such as control, mutability, centralization, and compliance feasibility.
• Banking regulators should abandon prior hostility toward the sector, particularly the so-called “Operation Choke Point 2.0” approach, and instead support lawful bank participation in digital asset activities. Regulators are encouraged to provide clear, technology-neutral guidance on charters, Federal Reserve Bank master accounts, capital treatment, and innovation.
• Stablecoins should be recognized as critical infrastructure for advancing U.S. dollar competitiveness. Policy makers should promote their adoption under the GENIUS Act and prohibit the issuance of a U.S. central bank digital currency (CBDC).
• U.S. agencies should promote global leadership in cross-border payments and financial market technologies, including through international standards aligned with American values.
• AML/CFT enforcement should be sharp but targeted: law enforcement should have the tools to pursue illicit actors without chilling lawful activity. Treasury and other agencies are directed to clarify AML obligations for banks and digital asset service providers.
• Tax policy should be modernized to reflect the unique characteristics of digital assets. Treasury and the IRS are urged to provide guidance for Congress to enact reforms on wash sales, loans of fungible tokens, and classification rules.

Establishing a Taxonomy for Digital Assets
After providing a technical and economic overview of the digital asset ecosystem, including core blockchain technologies, major market participants, and common transactional activities such as trading, staking, custody, and tokenization, the Report sets out a functional taxonomy for digital assets, though not grounded in current statute, that is intended to guide future regulation of digital assets. It divides the ecosystem into four primary categories: security tokens, commodity tokens, network tokens, and consumer or commercial-use tokens.

The first two categories largely reflect existing regulatory constructs. Security tokens include traditional securities issued in digital form, as well as tokens offered pursuant to investment contracts. The Report encourages the SEC to use its exemptive authority to create tailored frameworks for registration, disclosure, and trading. Commodity tokens—such as Bitcoin and Ether—are treated as falling within the CFTC’s jurisdiction, particularly in the derivatives markets. The Report recommends that Congress grant the CFTC express rulemaking authority over spot markets in non-security digital assets; currently, the CFTC's spot market authority is limited to antifraud and antimanipulation enforcement.

The third and fourth categories—network tokens and consumer or commercial-use tokens—reflect an effort to carve out new spaces outside the traditional regulatory perimeter. These categories are conceptually similar to the long-disputed notion of “utility tokens,” which has never been formally recognized in U.S. law. Network tokens are native tokens used to operate decentralized protocols. While such tokens may originate as investment contracts, the Report argues they should no longer be regulated as securities once the underlying network is fully functional and sufficiently decentralized. Consumer and commercial-use tokens—such as NFTs, event tickets, and loyalty points—are proposed to be treated primarily under consumer protection and commercial law, rather than as securities or commodities. If implemented, this taxonomy would mark a significant shift in the legal landscape by attempting to define new categories of tokens beyond the scope of current regulatory frameworks.

Specific Recommendations for Digital Asset Market Structure
The Report makes a number of recommendations for digital asset market structure, proposing regulatory, legislative and accounting changes. Some of the more important proposals are highlighted below. The following sections address the proposals directed at the SEC and CFTC, respectively.

• The SEC should use its exemptive and rulemaking authorities to facilitate distribution and trading of digital assets. The Report urges the SEC to use its existing exemptive and rulemaking authorities to facilitate the development of digital asset markets, even in the absence of new legislation. The suggested changes are boldly and broadly drawn and leave the details to the regulators. With respect to registration under the Securities Act, the Report encourages the SEC to “[e]stablish a fit-for-purpose exemption from registration under Section 5 of the Securities Act for securities distributions involving digital assets.”^[1]The scope of this recommendation is unclear; are they advocating for exemptions for ICOs? The Report advocates for a safe harbor based on a “no sale” theory or a specific exemption for airdrops, rewards for participation in decentralized physical infrastructure networks, or other token-based incentives. What might constitute consideration is not addressed. It encourages the creation of a safe harbor from registration for network tokens that are not yet fully decentralized or functional, thereby allowing issuers to bring assets to market while pursuing technical development or governance transitions. The conditions or time limitations on such a safe harbor are not discussed.
• Non-security digital assets—particularly those initially distributed pursuant to an investment contract—should be tradable on platforms that are not registered with the SEC immediately following the primary distribution. This reflects a clear policy intent to permit these assets to move quickly into secondary markets once they are no longer considered securities. The Report does not suggest that such platforms be unregulated, however. Instead, it proposes that platforms engaged solely in the trading of non-security digital assets should be subject to a reporting regime overseen by the CFTC. Additionally, it proposes that over time, a tailored registration framework based on the platform’s functional activities should be created. This approach raises unresolved questions about who determines when an asset transitions from security to non-security status, and whether the CFTC’s current antifraud and antimanipulation authority is sufficient to oversee these markets in the absence of formal registration and supervision. This can only be imposed if Congress expands the CFTC’s rulemaking authority to spot transactions in digital assets. The Report makes a number of other recommendations, including: changes to Regulation NMS to accommodate tokenized NMS securities, non-security digital assets and DeFi constructs; modernization of transfer agent rules; the broker-dealer status of non-custodial wallet providers; and guidance under the 1940 Acts on how custody rules apply to digital assets held by registered investment companies and advisers.
• The CFTC should expand its oversight of spot markets and develop a tailored regulatory framework for digital asset intermediaries. The Report encourages the CFTC to take a more active role in regulating digital asset markets, particularly with respect to non-security tokens such as Bitcoin and Ether. It acknowledges that the CFTC’s existing authority under the Commodity Exchange Act is limited to overseeing derivatives markets and to police fraud and manipulation in spot commodity transactions, viewing this as insufficient for the current market environment. The Report therefore recommends that Congress grant the CFTC explicit rulemaking authority over spot markets in digital assets that are not securities—a move that would transform the agency’s enforcement-only posture into a true regulatory mandate for primary and secondary digital asset markets.
• The CFTC should use its existing interpretive and exemptive tools to encourage innovation. For example, the Report suggests that the CFTC, in coordination with the SEC, consider using its authority under Section 1a(18) of the Commodity Exchange Act to create a new category of eligible contract participants (ECPs) authorized to engage in certain types of digital asset derivatives, including perpetual contracts. This recommendation appears aimed at expanding access to derivatives markets beyond traditional institutional ECPs, particularly in contexts where such contracts are not exchange-traded. While retail customers can already access perpetual futures listed on the CME through registered futures commission merchants (FCMs), bilateral or platform-traded perpetual contracts—especially those structured as swaps—currently fall within the ECP-only regime. The definition of ECP currently requires individuals to have discretionary investments in excess of $10 million (or $5 million if they are hedging an existing or anticipated asset or liability) but contains a catch-all for “any other person that the [CFTC] determines to be eligible in light of the financial or other qualifications of the person.” It will be interesting to see if and how the CFTC uses this catch-all to create a new category of ECPs for digital assets

In addition, the Report advocates for the development of a tailored registration regime for non-security digital asset trading platforms and intermediaries, including centralized and decentralized platforms. This includes reconsideration of how existing categories—such as futures commission merchants (FCMs), introducing brokers (IBs), swap dealers, and DCOs—map onto digital asset business models. The Report also highlights the need for clearer treatment of DeFi protocols and DAOs, including guidance on whether and under what conditions these entities may operate without formal registration. Although the Report does not provide specifics on how a DAO would satisfy AML, custody, or reporting obligations, it encourages the CFTC to take a functional approach based on the degree of control, centralization, and technical mutability of the protocol in question.

Taken together, these recommendations reflect the Report’s view that the CFTC has a central role to play in creating a regulatory environment that supports digital asset innovation while ensuring market integrity. However, much like the SEC section of the Report, these proposals assume that the agency can act aggressively under existing statutory authority. Without Congressional action to expand the CFTC’s mandate over spot markets, and to establish appropriate exemptions and definitional clarity, many of these recommendations may remain aspirational or vulnerable to legal challenges.

Banking and Digital Assets 
The Report next addresses the interaction between the banking sector and digital assets beginning with the creation of Bitcoin, including banks’ initial engagement with the digital asset industry and bank regulators’ shifting regulatory treatment of digital asset activities. The Report summarizes the Biden administration’s approach to digital asset-related banking activities, referred to by some as “Operation Choke Point 2.0”. It also describes the collective actions taken by bank regulators to reverse prior policies that had created a nascent framework for banks to engage in activities involving digital assets and replace those policies with requirements that banks seek prior regulatory approval or non-objection to engage in such activities and muddied the waters on the types of digital asset activities in which banks could engage.

The Report then describes the range of important services that banks can provide to the digital assets industry, including deposit accounts, loans and trading, settlement, and custody services. Banks can also facilitate the tokenization of traditional products and services using distributed ledger technology. The Report notes that banks have been slow to provide these services and posits that this is due in significant part to regulatory uncertainty and recommends several specific measures to create a clear regulatory framework to permit banks and other depository institutions to facilitate engagement with the digital assets industry and to adopt digital asset technology in a safe and sound manner.

The following sections address the proposals directed at the federal banking regulators—the OCC, FDIC, and the Federal Reserve (collectively, the “Banking Agencies”). These include:

• Relaunch Banking Agencies’ crypto innovation efforts to address outstanding bank activities. In recent months, the Banking Agencies have revived prior guidance that confirmed that banks could provide crypto-asset custody, engage in certain stablecoin activities, and participate in independent node verification networks. The Report encourages the Banking Agencies to provide further clarity on the permissible digital assets activities in which banks may engage and to ensure (to the extent permitted under applicable law) parity between bank charter types (e.g., between federal and state banks, and between commercial banks and trust banks). The Report calls on the Banking Agencies to: focus on further reenforcing that it is permissible for banks to take custody of digital assets and the technical best practices for doing so; offer additional guidance on holding stablecoin reserves as deposits following enactment of the GENIUS Act; and provide clarity on whether it is permissible for depository institutions to hold digital assets on their balance sheet. The Report also urges the Banking Agencies to develop risk-based principles and best practices to support both banks engaged in digital assets activities and agency supervisors who examine such banks. Critically, the Report calls on the Banking Agencies to ensure that these principles are technology neutral and do not classify supervisory policies based solely on a bank being engaged with the digital assets industry.
• Access to providing banking services. The Report describes how certain digital assets firms have considered obtaining bank charters, which typically authorize regulated institutions to provide a full suite of products and services including accepting deposits, making loans, and other financial services including payments, wealth management, custody, and currency exchange. Other bank charter types may authorize regulated institutions to provide more limited services, such as trust company charters. Other firms have sought bank charters specifically for the purpose of obtaining a Federal Reserve Bank Master Account, which can greatly facilitate payment and other customer services. However, firms seeking these authorizations have expressed frustration with a lack of transparency in the timing and process for completing applications for bank charters or master accounts.

The Report recommends that the Banking Agencies take concrete steps to increase clarity and transparency in the process for firms to obtain a bank charter or master account. Specifically, the Report urges the Banking Agencies to enshrine a clear timeline in regulations for decision making on completed applications, and to further provide in regulations that an application should be deemed approved if an agency does not meet the regulatory timeline for a given application. The Report also suggests that the Banking Agencies clarify that entities are not prohibited from obtaining a bank charter, deposit insurance, or master account access based solely on engaging in digital asset-related activities.

• Risk-based capital requirements tailored for digital assets. The Report explains that the current U.S. regulatory capital framework does not specifically address digital assets exposure. The Report calls on the Banking Agencies to adopt risk-based capital requirements for bank digital asset activities. It further urges the Banking Agencies to clarify the circumstances in which tokenized assets and collateral would be subject to the same treatment as the underlying asset or collateral. The Report also describes the Basel Committee on Banking Supervision’s international standards for the prudential treatment of crypto asset exposures and criticizes the complexity of the standard. The Reports calls on the Banking Agencies and Department of the Treasury to advocate for the simplification and modernization of the Basel standards to incorporate new data on the digital asset market and clearer treatment of digital assets.

Stablecoins and Payments 
The GENIUS Act—which was signed into law on July 18—establishes the first comprehensive U.S. regulatory framework for payment stablecoins, providing regulatory clarity to support increasing stablecoin adoption. Although the GENIUS Act creates a regulatory regime for the licensing and supervision of payment stablecoin issuers, it delegates implementation of many key components of this regime to the Banking Agencies.

The Report describes the primary types of stablecoins: those that are backed by a pool of liquid, high-quality reserves; those that are backed by other reserve assets (such as other digital assets, precious metals, or less liquid or lower quality financial assets); and those, called “algorithmic stablecoins”, that attempt to maintain their value based on pre-programmed responses to the market rather than based on a pool of reserves. The Report also discusses recent fiat currency payment system innovations designed to facilitate faster and more payments, including the instant Real-Time Payment system created by a consortium of financial institutions and the Federal Reserve System’s FedNow instant payment system.

The Report makes a series of recommendations designed to help the shape the development of new payment systems and reenforce U.S. global financial leadership. Those recommendations include the following:

• The Banking Agencies should faithfully and expeditiously implement GENIUS Act regulations. The Report urges the Banking Agencies and other relevant federal agencies, including Treasury, the NCUA, the SEC and the CFTC, to faithfully and expeditiously implement the requirements of the GENIUS Act. This includes further defining the dual federal and state licensing framework created by the GENIUS Act, providing further clarity and transparency on reserve requirements, and implementing risk-based AML/CFT requirements for payment stablecoin issuers.

This is happening already. On August 18, 2025, the Department of the Treasury issued a Request for Comment required by section 9(a) of the GENIUS Act seeking “feedback on innovative or novel methods, techniques, or strategies that regulated financial institutions use, or could potentially use, to detect illicit activity involving digital assets.” In particular, Treasury asks commenters about application program interfaces, artificial intelligence, digital identity verification, and use of blockchain technology and monitoring.

• Prohibit or discourage central bank digital currencies in the U.S. and abroad. The Report describes a CBDC, as a digital form of fiat money that is direct liability of a central bank. Although the U.S. has not meaningfully explored a U.S. dollar CBDC, other countries and jurisdictions have. For example, China has engaged in an expansive pilot project, and the European Central Bank has been preparing to potentially issue a digital euro for several years. The Report criticizes CBDCs as a means of consolidating government control and a significant intrusion of individual economic and privacy rights. The Report recommends that the U.S. government discourage, oppose, and prohibit any agency from issuing a CBDC, whether in the U.S. or abroad. It also recommends legislation specifically prohibiting the adoption of a U.S. CBDC. Instead, it recommends supporting efforts by U.S. private sector technological leadership to upgrade domestic payment systems, cross-border payments, and other financial market technologies.
• Promote the competitiveness of the U.S. dollar through digital asset payments and capital markets. The Report also outlines several steps the U.S. can take to promote the U.S. dollar and maintain U.S. financial leadership, including: creating standards and best practices for new technologies based on U.S. interests and values; encouraging payment solutions that protect the U.S. dual banking system and preserve individual rights; and engaging with the international financial community to protect the primacy of the U.S. dollar.

Conclusion
The Report represents a significant policy realignment, embracing innovation-driven regulation, a narrower administrative footprint, and clearer pathways for digital asset development and trading. If implemented, the Report’s recommendations would offer significant new opportunities for market participants to innovate within a compliant framework. But many of its recommendations—including CFTC spot market jurisdiction, statutory definitions for digital assets, and federal tax treatment reforms—require congressional action, and cannot be implemented through agency action alone. Even such legislation is likely to require regulatory action to implement. This could take a long time and possibly be contested. Until a coherent legal framework emerges, interim regulatory uncertainty is likely inevitable. Market participants may face inconsistent guidance, overlapping jurisdictional claims, and uneven enforcement practices, particularly in areas like DeFi, custody, and token classification. Thus, the Report provides a strategic starting point, but not a finished product. The future of digital asset regulation will depend as much on congressional action and interagency cooperation as on market adaptation and legal interpretation.

As the digital asset ecosystem continues to evolve, market participants, and those preparing to enter should embrace the opportunities for innovation while carefully tracking regulatory developments and working with counsel to navigate compliance with confidence.

^{[1] Report at p. 51.}