In a report released on Wednesday, 30 July, the President’s Working Group on Digital Assets Markets surveyed the current state of US digital assets and its regulatory status and made recommendations that could see a resurgence of the sector in the US.
The report finds that digital asset regulation in the US is “aggressive” and amounts to “regulatory overreach,” as US President Donald Trump had often repeated during his campaign. It also notes that excessive regulation under the Biden administration – which many in the industry termed Operation Chokepoint 2.0 – had forced banks to cut off lawful crypto businesses, effectively debanking the industry and forcing many companies to move abroad.
The Working Group that wrote the report was made up of officials from the Federal government, including Paul Atkins, the Chairman of the Securities and Exchange Commission, and Homeland Security Secretary Kristi Noem; the Federal Reserve and banking regulators, while having been consulted for the report, were notably absent from its list of authors.
The report’s recommendations aim to make the US the “crypto capital of the world,” as Trump promised in a speech at a cryptocurrency conference in March.
The Working Group recommended passing legislation to enable the Commodity Futures Trading Commission (CFTC), which currently regulates US derivatives markets, to oversee spot markets for non-security digital assets and to incorporate decentralised finance (DeFi) technology into mainstream finance.
A key focus of the report is relaunching innovation, which it says has been stifled by excessive bureaucracy and legal constraints. The authors urge federal agencies like the US Treasury and the Internal Revenue Service (IRS) to clarify and issue guidance on the fiscal status of digital assets, and propose legislation to classify digital assets as a new class of assets subject to similar rules as securities or commodities for tax purposes.
The IRS currently considers digital assets property, not currency, which many in the crypto industry say makes rules unnecessarily complex and unwieldy.
This comes as the current administration works to boost the US economy – whether through high tariffs intended to encourage domestic production or through banking deregulation to promote innovation. Relaxing rules around digital assets may lure crypto and tech companies to the US, establishing it as a centre for innovation.
However, deregulation around some of the most controversial aspects of digital assets, like lower standards for anti-money laundering and KYC practices, may lead to a destabilisation in the wider payments sphere in the long run.
