[WASHINGTON] A group charged by US President Donald Trump with recommending policies on crypto markets called on federal regulators to use their authority to provide more clear rules on the trading of digital assets and ease the adoption of new financial products in a report released on Wednesday (Jul 30).
“By implementing these recommendations, policymakers can ensure that the United States leads the blockchain revolution and ushers in the Golden Age of Crypto,” the White House said in a fact sheet on the report from the Working Group on Digital Asset Markets.
The policy proposals from the group, which was established by an executive order signed by Trump in January, touch on a wide range of issues in the digital asset space. Those include calls for Congress to pass the Digital Asset Market Clarity Act to eliminate gaps in regulatory oversight by providing the Commodity Futures Trading Commission authority to “oversee spot markets for non-security digital assets” and measures that embrace decentralised finance technologies.
The report urges the Securities and Exchange Commission and CFTC to use their existing powers to “immediately enable the trading of digital assets at the federal level” by providing more clarity on issues such as registration, custody, trading and recordkeeping. And it calls for allowing “innovative financial products to reach consumers without bureaucratic delays”, recommending the use of so-called safe harbours and other regulatory tools, according to the fact sheet.
The report also presses regulators to clarify “permissible bank activities” in regards to stablecoin issues and the use of blockchains, promote transparency on how institutions can obtain bank charters and ensure that bank capital rules better reflect the risks particular to digital assets.
The working group’s recommendations come after Trump earlier this month signed the first congressional bill to regulate stablecoins, delivering a major win for the crypto industry. That law sets regulatory rules for US dollar-backed stablecoins that advocates see as allowing for the broader adoption of digital assets in finance.
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Trump, once a sceptic of cryptocurrencies, grew to become a champion of the industry, vowing during the 2024 campaign to usher in policies that would ease regulatory burdens. That election also heralded the arrival of the crypto industry as a political force, with investors and executives using well-funded political action committees to back friendly candidates.
Trump and his family have ties to digital-asset businesses, including World Liberty Financial, a platform with its own branded token and stablecoin.
In office, Trump tapped venture capitalist David Sacks to be the first-ever White House artificial intelligence and crypto czar and signed an executive order calling for the creation of a Strategic Bitcoin Reserve and a separate stockpile of other digital assets.
The White House plans to provide additional details about the Strategic Bitcoin Reserve in short order, according to an administration official who spoke on condition of anonymity on Wednesday because the plans have not been made public. The reserve is expected to be comprised of about 198,000 Bitcoin that the US government has seized from criminal cases and other proceedings, according to Arkham, a company that tracks cryptocurrency activity.
Various agencies were supposed to provide the Treasury Department with the exact count of their Bitcoin holdings earlier this year. An executive order from Trump in January instructed the Treasury to hold and to not sell those Bitcoin. The Treasury and Commerce departments have also been directed to find “budget neutral” ways to acquire more Bitcoin.
Many crypto investors are eager to learn more about the amount the government plans to buy and how it will do so, as large purchases typically move Bitcoin’s price.
The report also addressed wash sales, the practice of selling an asset at a loss and quickly repurchasing it to lock in a tax deduction. It urged regulators to extend existing rules that bar such loss deductions for securities to cover digital assets as well.
Exactly which tokens would fall under the rules remains unclear. “Because wash-sale rules apply to securities, they would not apply to digital assets that are not securities,” the report said. It recommended exempting coins that underpin decentralised blockchains, along with stablecoins primarily used for payments.
Among the Wednesday report’s other recommendations are a call for the Treasury Department and other regulators to provide more clarity on Bank Secrecy Act obligations and reporting requirements to better crack down on money laundering.
The report’s authors also urge Congress to pass legislation that “treats digital assets as a new class of assets subject to modified versions of tax rules applicable to securities or commodities” for federal tax purposes. And they suggest that the Treasury and Internal Revenue Service provide guidance on digital assets in regards to the corporate alternative minimum tax and other matters. BLOOMBERG
