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White House Releases Digital Assets Framework

On September 16, the White House released its first comprehensive federal digital assets framework. This “fact sheet” follows the March 9 publication of President Biden’s Executive Order (EO) on Ensuring Responsible Development of Digital Assets. The initiative was directed by the National Economic Council (NEC) in association with Jake Sullivan, the US National Security Advisor.

The digital assets framework summarizes reports and policy recommendations based on the EO’s six key priorities:

  1. Consumer And Investor Protection
  2. Promoting Financial Stability
  3. Countering Illicit Finance
  4. US Leadership In The Global Financial System And Economic Competitiveness
  5. Financial Inclusion
  6. Responsible Innovation

As it is a comprehensive and in-depth briefing, we wanted to share some highlights from the briefing that piqued our interest:

Independent Regulators Involvement

The current administration is aware of the risks associated with the volatility of cryptocurrencies and the rise of digital market scams. Moreover, according to their findings, approximately 25% of digital coin offerings appeared to have disclosure and transparency issues.

To safeguard consumers and combat these security issues, the administration encourages independent regulators and agencies to investigate and monitor user complaints in the digital assets field. With this, some of these regulators have already been taking steps on the matter:

  • The Commodity Futures Trading Commission (CFTC), for instance, is preparing to regulate the crypto commodity market. At this time, the CFTC only mentions Bitcoin (BTC) and Ethereum (ETH) by name as crypto assets under its supervision.
  • In contrast, the Securities and Exchange Commission (SEC) intends to establish an Office of Crypto Assets. The SEC would examine crypto company documentation and regulate all blockchain assets classified as securities.
  • The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) have also been invited to strengthen their efforts to prevent and combat crypto scams. On the other hand, the Financial Literacy Education Commission (FLEC) is encouraged to continue providing educational research on digital assets and fraudulent practices.

Financial Stability For Digital Assets

Stablecoins are a top priority for the digital assets framework, especially following the TerraUSD crash in May 2022. Building on the recommendations of the President’s Working Group on Financial Markets from 2021, the US Treasury will cooperate with financial institutions and other agencies to identify and mitigate digital market vulnerabilities by sharing data sets and analytical tools.

digital assets

Additionally, the Treasury will collaborate with US allies and international organizations, such as the Organisation for Economic Co-operation and Development (OECD) and the Financial Stability Board (FSB).

Cybersecurity And The Bank Secrecy Act

The United States applies the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework to the ecosystem of digital assets. However, this has not been sufficient to stem the rise of criminal activities on the blockchain, such as ransomware attacks and cryptocurrency laundering to fund rogue regimes and illicit organizations.

In response, President Biden considers addressing Congress and updating statutes and laws like the Bank Secrecy Act (BSA). He is looking to include direct references to digital asset service providers, such as cryptocurrency exchanges and Non-Fungible Token (NFT) marketplaces. He also intends to discuss increasing the penalties for unlicensed digital money laundering to match the penalties for similar offenses, as well as allowing the Department of Justice to prosecute crimes involving digital assets.


Furthermore, the US Treasury is conducting an illicit finance risk assessment on decentralized finance that will be completed by February 2023. This will be followed by an NFTs assessment, to be completed by July 2023.

FedNow and financial accessibility

Approximately 7 million Americans do not have a bank account, whereas over 20 million rely on checks and money orders for daily transactions. The Federal Reserve intends to launch FedNow, a secure and accessible interbank clearing system. The platform, scheduled for release in 2023, may include digital assets to facilitate faster national payments.

Agencies will support payment providers’ use of innovative instant transactions, such as FedNow, and utilize the systems for emergency relief and government-to-consumer payments. In addition, these agencies will work to improve international payments by aligning with global practices, regulations, and protocols, while also considering new multilateral platforms that support instant transactions.

Responsible Digital Assets Research

This new framework stipulates that research into digital assets will be interdisciplinary, globally competent, and widely responsible involving more agencies and departments than just the US Treasury and financial regulators.

Security in mobile and computer transactions.

The Office of Science and Technology Policy (OSTP) and the National Science Foundation (NSF) will launch a Digital Assets Research and Development Agenda, conducting research on topics such as cryptography, transaction programmability, cybersecurity, privacy protections, and mitigation of digital assets’ environmental impacts. The Department of Energy, the Environmental Protection Agency, and other agencies will also consider working on this subject, with the objective of transforming the digital assets industry into a net-zero emissions economy.

In addition, the Department of Commerce will consider establishing a permanent forum to bring together federal agencies, leaders of the industry, acclaimed academics, and members of civil society. This forum would facilitate the exchange of information in support of federal regulation and standards, activity coordination, sc research, and technical assistance.

A US Central Bank Digital Currency

Finally, the digital assets framework suggests the idea of a US Central Bank Digital Currency (CBDC). This US CBDC could facilitate faster, more efficient, accessible, and environmentally sustainable national and international transactions.  

Central Bank Digital Currency

To prepare for the potential development of this digital currency, the Administration has developed Policy Objectives for a US CBDC system, aligned to the aforementioned EO’s key priorities. The Federal Reserve will need to continue its research on the subject, supported by a US Treasury-led inter-agency group. This collective will also include the National Economic Council, the National Security Council, and the Office of Science and Technology Policy.

The digital assets framework is unprecedented in US history. Critics assert that it is “more of the same”, as the commodity vs. security debate remains opaque. Nonetheless, this is an emerging plan for an emerging technology. The government and agencies have taken significant steps in the last six months, but it will be a matter of time before they can demonstrate results and how closely they will adhere to the framework.