Through Executive Order No. 14178, the President established the Working Group on Digital Asset Markets (the “Working Group”) and enlisted it to prepare a comprehensive review of the United States’ regulatory, supervisory, and policy environment for digital assets. On July 30, 2025, the Working Group published the resulting report, a detailed 166-page report entitled “Strengthening American Leadership in Digital Financial Technology” (the “Report”), summarizing the current digital asset marketplace and recommending legislative and administrative actions designed to cement U.S. primacy in the global digital-asset economy.
The Report opens with a short introduction that details the new administration’s change in direction and goal that the US become the “crypto capital of the world” and welcome innovative new developments in the crypto space. This section identifies “core recommendations” to accomplish these goals, which center around establishing clear rules to govern participants in the U.S. digital asset market, encouraging the adoption of new innovation in crypto, and creating a regulatory atmosphere that boosts investment in the U.S. digital asset marketplace. The Report then includes detailed discussions around key topics: digital asset ecosystem, digital asset market structure, banking and digital assets, stablecoins and payments, countering illicit finance, and taxation. The Report then concludes with recommendations for the relevant legislators and regulators to consider when implementing future guidance and guidelines governing digital assets.
The Digital Asset Ecosystem
The Working Group summarizes the current digital asset ecosystem and details key functions within the marketplace. Recognizing the upward trend in the total market capitalization of crypto-assets, the Report details the new participants, the recent and growing interest by retail investors, the value and features of DeFi protocols and other key features in the marketplace, key regulators, and potential risks to consumers.
The Current Regulatory Environment and Recommendations
The “Digital Asset Market Structure” section categorizes certain digital assets for regulators and details various recommendations to regulators and legislators. Recognizing that the patchwork application of existing securities and commodities laws has left lawful actors navigating jurisdictional minefields, the Working Group proposes a functional taxonomy that distinguishes among Security Tokens, Commodity Tokens, and Tokens for Commercial and Consumer Use.
Security Tokens are defined as digital assets that may constitute securities under SEC v. W.J. Howey Co., which would fall under SEC regulation and to which current securities laws and regulations would apply. The Working Group recognizes certain digital assets as securities; for instance, non-security digital assets like network tokens may constitute securities when they are offered or sold as the subject of an investment contract.
Commodity tokens are defined as digital assets that do not constitute securities and often constitute commodities that would thus fall under CFTC regulation and to which current commodities laws and regulations would apply. This discussion also recognizes certain assets as Commodity Tokens, such as protocol or network tokens that are sufficiently decentralized so that their value is not dependent on the intervention or control of a single person or group.
Tokens for Commercial and Consumer Use are defined as digital assets that provide access to a specific good, service, or privilege and are subject to other federal and state laws applicable to commercial transactions. Commercial Use Tokens are defined as digital representations of traditional commercial instruments, such as warehouse receipts and documents of title. But unlike network tokens, these assets are often not associated with a decentralized network protocol. Consumer Use Tokens can include tokens that can be redeemed for a consumptive purpose, such as video game rewards.
The Working Group recommends certain actions for each set of assets. Many of the Report’s recommendations are directed to the SEC. The Working Group recommends that Security Tokens remain within the SEC’s ambit and that Commodity Tokens should continue to fall under the CFTC’s oversight. But the Working Group urges the SEC to craft fit-for-purpose exemptions, safe harbors with clear guidelines, and carve-outs like “innovation exemptions” to allow for innovative new business models. The SEC and CFTC are recommended to coordinate in their respective regulatory approach to provide clarity, including, for instance, in adopting a flexible approach that allows registrants to offer multiple services within a single business model or interface. The CFTC is also recommended to consider how to amend the current rules to enable the use of blockchain-based derivatives.
The Report notes that Tokens for Commercial and Consumer Use should be subject to federal and state laws applicable to commercial transactions. But the Working Group calls upon the federal government to immediately modernize the rules so that Americans can lawfully handle digital assets without widespread confusion. Beyond interim relief, the Working Group endorses legislation—such as the Clarity Act of 2025—to enshrine clear jurisdictional lines. Federal pre-emption of duplicative state regimes is recommended to avoid forum shopping and to harmonize cross-border liquidity.
Digital Assets in Banking, Stablecoins, Taxation, and Countering Illegal Activity
The Report goes on to detail similar summaries and recommendations concerning the regulation of digital assets with respect to banking, stablecoins, and taxation, while also proposing methods for addressing illegal activity related to digital assets.
The Working Group details the historic de-banking of digital asset firms and encourages banks and other financial institutions to participate in digital-asset-related activities. The Working Group emphasizes the services that financial institutions can provide to grow the digital asset market, such as providing valuable infrastructure for digital asset market participants to interact with the broader economy. Recommendations focus on encouraging innovation in digital asset products, such as by clarifying the parameters of bank engagements with digital assets and blockchain products like tokenized deposits, the use of permissionless blockchain for crypto assets, and the capital and liquidity requirements for bank digital assets and token assets and collateral. The Working Group also recommends several incentives for banks to further enter the digital asset market. For instance, the Report notes that reputational risk as a basis for supervisory criticism is in the process of being removed and that applications for charter licensing should be deemed approved if the regulatory timelines are not met for a given application.
The Working Group then discusses stablecoins, recognizing U.S. dollar-backed stablecoins as the next evolutionary step in global payments. President Trump signed into law the GENIUS Act on July 18, 2025, which provides clarity on stablecoins and incentives to bring them onshore. The Working Group encourages policymakers to adopt stablecoins, implement guidance under the GENIUS Act, and implement changes to the current regulatory framework to expand the use of stablecoins for payment. The Working Group also recommends that development of a central bank digital currency should be discouraged.
The Working Group also recognizes that the unique technological features of digital assets warrant tailored safeguards. The Report recommends that U.S. law enforcement agencies adopt tools that can be used to address illegal activity related to digital assets, but warns that they should never be misused to target the lawful activities of law-abiding citizens. As part of the latter, the Working Group notes that FinCEN is withdrawing rulemaking (as to the “unhosted wallet rule”) and that the DOJ adopted new guidance stating future DOJ prosecutions involving digital assets should focus prosecutions on intentional misconduct, like that which victimizes digital asset investors.
Finally, the Report surveys existing IRS guidance treating digital assets as property and identifies gaps that hinder compliance and capital formation. The Working Group recommends that government agencies provide guidance or enact legislation that will help taxpayers understand their federal tax obligations, including for more unique transactions, like wrapping and unwrapping transactions, and issuing new guidance, like that addressing de minimis receipts of digital assets to account for small rewards given to validators.
Takeaways
The Working Group’s report presents an ambitious blueprint for U.S. leadership in digital finance. It seeks to align innovation with the rule of law by clarifying jurisdictional boundaries, modernizing banking standards, safeguarding consumer rights, and deploying robust tools against illicit actors. Those interested in digital assets are encouraged to read the Report in detail and monitor legislation and regulations to determine which parts of the Report, if any, are formally implemented and how.
