Interpreting the White House digital asset report: Regulatory clarity, embracing Decentralized Finance and innovative financial products

Since President Donald Trump requested the establishment of a digital asset market working group in January of this year and submitted a report outlining recommendations for a digital asset regulatory framework, this report has been highly anticipated. Some in the crypto community even claim that this report will become the 'regulatory bible' or guide for the industry.

The "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). According to statistics, this 166-page digital asset report mentions cryptocurrencies 391 times, Bitcoin 130 times, Decentralized Finance 32 times, and Ethereum 28 times.

The report outlines a comprehensive regulatory roadmap for cryptocurrencies, proposing policy recommendations across multiple crypto-related domains. These can be primarily categorized into five major areas:

1. Position the United States as a leader in the digital asset market.

The working group recommends that Congress should enact the following legislation based on bipartisan approval of the "CLARITY Act" in the House of Representatives:

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

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

The SEC and CFTC should leverage their existing powers:

· Launch digital asset trading at the federal level immediately, and clarify issues such as registration, custody, trading, and record-keeping for market participants.

· By using tools such as safe harbors and regulatory sandboxes, innovative financial products can benefit consumers without being delayed by bureaucracy.

2. Modern digital asset banking regulation

The report states that the Trump administration has completely terminated the "Kill Switch 2.0" initiative, committed to ending regulatory measures that refuse banking services to the digital asset industry. The working group recommends that regulators take the following additional actions:

· Restart the cryptocurrency innovation work and clarify the permissible activities of banks in custody, tokenization, stablecoin issuance, and blockchain applications.

· Improve the transparency of the process for institutions to obtain banking licenses or reserve bank master accounts.

· Ensure that the bank capital rules are consistent with the actual risks of digital assets, and not just their existence in distributed ledgers.

3. Strengthening the position of the US dollar

The Ministry of Finance and banking institutions should faithfully and promptly execute the GENIUS Act.

The Congress should take further action to pass the "Anti-Central Bank Digital Currency Surveillance State Act," codifying the President's executive order prohibiting the U.S. central bank digital currency, in order to protect privacy and civil liberties.

4. Combat Illegal Finance in the Digital Age

· The Ministry of Finance and relevant regulatory agencies should clarify the obligations and reporting of the Bank Secrecy Act (BSA).

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

Regulatory agencies should strive to prevent the abuse of power against the legitimate activities of law-abiding citizens and protect citizens' privacy.

5. Ensure the fairness and predictability of digital asset taxation

The Department of the Treasury and the IRS should issue guidance on topics related to CAMT (PANews note: Corporate Alternative Minimum Tax), packaged transactions, and minimum income thresholds for digital assets to alleviate the burden on taxpayers.

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

· Congress has enacted legislation recognizing digital assets as a new asset class and modifying the tax rules applicable to securities or commodities according to federal income tax regulations, adding digital assets to the list of assets subject to wash sale rules.

After the release of the report, the industry generally viewed it as a positive signal for Trump's cryptocurrency agenda direction.

Ji Kim, CEO of the Crypto Council for Innovation, stated: "The release of the President's Working Group on Digital Assets report marks a united effort across the government to ensure that the U.S. remains at the forefront during the golden age of cryptocurrency. From Decentralized Finance, tokenization, market structure, CIF, taxation, and more - the report covers it all. We now have clear regulatory guidelines to ensure continued growth."

Rebecca Rettig, legal counsel at Jito Labs, also gave her affirmation after the report was released, stating: "Although there is still much work to be done, this outstanding roadmap provides guidance for the true realization of regulatory transparency in the U.S. crypto industry."

However, it is worth mentioning that while the report is a "significant victory" for the cryptocurrency industry, it does not reveal any new measures or provide in-depth explanations of specific policy actions, leaving some unresolved questions, including those related to the future scale of federal government cryptocurrency reserves. An official stated at the press conference that the focus of the report is on the regulatory framework rather than reserves, and more information should be released soon.

In addition, the report also acknowledges that Congress has not yet passed the market structure bill, which brings many restrictions to the industry. This bill would establish a more comprehensive regulatory framework for the issuance of cryptocurrencies and the operation of exchanges like Coinbase. Although 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 a state of uncertainty while Congress continues to debate legislation.

Although this report may "fall short of expectations," it may be, as U.S. officials have stated, that "they have laid a solid foundation for the construction of this house."