Interpreting the White House Digital Asset Report: Regulatory Clarity, Embracing DeFi, and Innovative Financial Products

Compiled by: Felix, PANews

Since President Donald Trump requested the formation of a Digital Asset Market Working Group in January this year and the submission of a report outlining a proposed regulatory framework for digital assets, this report has been highly anticipated. Some in the crypto community even claimed that this report would become the industry's "regulatory bible" or guide.

Now, this "regulatory bible" has finally been released. The government led by President Donald Trump published the most detailed digital asset policy report on Wednesday, July 30, with the 166-page digital asset report mentioning cryptocurrency 391 times, Bitcoin 130 times, DeFi 32 times, and Ethereum 28 times.

The report outlines a comprehensive regulatory roadmap for cryptocurrency, presenting policy recommendations covering multiple areas related to crypto. These can be broadly categorized into five main areas:

1. Positioning the U.S. as a Leader in the Digital Asset Market

The working group suggests that Congress should enact the following legislation based on the bipartisan vote of the CLARITY Act in the House:

· Authorize the CFTC to regulate the spot market of non-securities digital assets to eliminate existing regulatory gaps.

· Embrace DeFi technology and recognize the potential of integrating this technology into mainstream finance.

The SEC and CFTC should leverage their existing powers:

· Promptly launch digital asset trading at the federal level and provide clarity to market participants on issues such as registration, custody, trading, and recordkeeping.

· Enable innovative financial products to benefit consumers without bureaucratic delays through tools like safe harbors and regulatory sandboxes.

2. Modernizing Digital Asset Bank Regulation

The report states that the Trump administration has completely terminated "Operation Choke Point 2.0," which aimed to end regulatory measures that deny banking services to the digital asset industry. The working group recommends that regulatory agencies take the following additional measures:

· Restart cryptocurrency innovation efforts, clarifying the activities banks are allowed in custody, tokenization, stablecoin issuance, and blockchain applications.

· Increase transparency in the process for institutions to obtain banking licenses or primary reserve bank accounts.

· Ensure that banking capital rules align with the actual risks of digital assets, not just their presence on a distributed ledger.

3. Strengthening the Dollar's Role

· The Treasury Department and banking institutions should faithfully and promptly execute the "GENIUS Act."

· Congress should take further action by passing the "Anti-Central Bank Digital Currency Surveillance State Act" to codify the presidential prohibition of the U.S. central bank digital currency executive order into law to protect privacy and civil liberties.

4. Combating Illegal Finance in the Digital Age

· The Treasury Department and relevant regulatory agencies should clarify the obligations and reporting under the Bank Secrecy Act (BSA).

· Congress should emphasize the importance of self-custody and clarify the anti-money laundering/counter-terrorist financing obligations of participants in the DeFi ecosystem.

· Regulatory agencies should strive to prevent abuses of power targeting lawful activities of citizens and protect citizens' privacy.

5. Ensuring Fairness and Predictability of Digital Asset Taxation

· The Treasury Department and the IRS should issue guidance on topics related to CAMT (Corporate Alternative Minimum Tax), transaction bundling, and minimum income from digital assets to ease the taxpayer burden.

· The Treasury Department and the IRS should review previously issued guidance on the tax treatment of activities such as mining and staking.

· Congress should enact legislation to classify digital assets as a new asset class, amend tax rules applicable to securities or commodities, and add digital assets to the list of assets subject to anti-money laundering rules.

Following the release of the report, the industry widely views it as a positive signal for the Trump administration's crypto agenda.

Ji Kim, CEO of the Crypto Council for Innovation, stated, "The release of the President's Working Group on Financial Markets report signals a united government effort to ensure U.S. leadership in the crypto gold rush era. From DeFi, tokenization, market structure, CIF, taxation, and more—this report covers it all. We now have clear regulatory guidance to ensure continued growth."

Rebecca Rettig, Legal Counsel at Jito Labs, also praised the report, stating, "While there is still much work to be done, this excellent roadmap provides guidance for true regulatory transparency in the U.S. crypto industry."

However, despite the report being a "major win" for the crypto industry, for those closely monitoring these policies, the report did not reveal new initiatives and did not delve into specific policy measures, leaving some unresolved issues, including those related to the future scale of the federal government's cryptocurrency reserves. An official stated during a press conference that the focus of the report is on the regulatory framework rather than reserves, and more information should be forthcoming soon.

Furthermore, the report also acknowledges that Congress has not yet passed the Market Structure Bill, which has placed many restrictions on the industry. This bill would establish a more comprehensive regulatory framework for the issuance of cryptocurrencies and the operation of exchanges like Coinbase. While the report encourages the SEC and CFTC to provide clearer guidance on key functions such as registration, custody, and trading, many market participants will remain in limbo as Congress continues to debate legislation.

While this report may have fallen short of expectations, perhaps, as U.S. officials put it, "they have already laid a solid foundation for the construction of this house."