The White House Working Group on Digital Assets called upon regulators and lawmakers Wednesday to cement rules and regulations around registration, custody and trading of digital assets in pursuit of “the new American Golden Age.”
In 166 pages, the group called upon the Securities and Exchange Commission and Commodity Futures Trading Commission to use their existing powers to legalize cryptocurrency trading at the federal level. The report also urged Congress to draft legislation granting the CFTC authority to regulate spot markets in non-security digital assets, something a bill introduced by Sens. Kirsten Gillibrand, D-NY, and Cynthia Lummis, R-WY, in 2022 aimed to do.
The group also said federal banking regulators – the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and National Credit Union Administration – “should never again pursue the Biden Administration’s policies of Operation Choke Point 2.0 and should instead embrace the opportunities digital assets and blockchain technologies offer to banks nationwide.” That referred to an alleged coordinated regulatory effort by the Biden administration to undercut the crypto industry by blocking it out of the banking system.
Banking regulators should ensure risk management guidance is technology-neutral, and should relaunch efforts to provide clarity on activities banks want to pursue, the report said.
“To support these efforts, the United States should adopt capital requirements for bank digital asset activities that accurately reflect the risk of the asset or activity,” the group wrote. “The relevant federal banking regulators should provide clarity and transparency regarding the process for eligible institutions to obtain a bank charter or a Reserve Bank master account.”
Crypto-focused bank Custodia tried and failed to obtain a Reserve Bank master account. Custodia fought the Fed in court over it and lost, with a judge last year ruling that federal laws don’t require the Fed to give every eligible institution a master account.
The report’s primary suggestions included strengthening the role of the U.S. dollar by moving forward “faithfully and expeditiously to implement the GENIUS Act” – which creates a framework for stablecoins and was recently enacted – and combating illicit finance by modernizing anti-money laundering rules to suit digital assets.
Additionally, the group suggested Internal Revenue Service updates to eliminate compliance hurdles for both individuals and businesses engaged in crypto-related activities. Congress, the working group wrote, should enact legislation treating crypto as a new class of assets subject to modified securities and commodities tax rules for federal income tax purposes.
Crypto industry players celebrated the release of the report, which Anchorage Digital CEO Nathan McCauley called a “blueprint for achieving more regulatory clarity for the industry and the millions of Americans who use crypto.”
“The comprehensive and thoughtful recommendations from the working group are exactly what we need to drive innovation and unlock the next era of U.S. leadership in global finance,” he said in an emailed statement. “Coupled with a recent series of legislative breakthroughs — such as the historic GENIUS Act — we are achieving clearer rules of the road nearly every week.”
