The digital assets market has expanded rapidly in recent years. Today, millions of people worldwide—including 16% of U.S. adults—own digital assets. By November of last year, the sector had reached a global market capitalization of $3 trillion. While digital assets create opportunities to strengthen U.S. leadership in the global financial system and remain at the forefront of technological innovation, they also carry significant risks. Recent events underscore these vulnerabilities: the collapse of a so-called stablecoin in May and the wave of bankruptcies that followed erased more than $600 billion in consumer and investor funds.
In response, President Biden issued an Executive Order on March 9, directing a first-ever, whole-of-government strategy for the responsible development of digital assets. Over the past six months, federal agencies have collaborated to design policy frameworks and recommendations aimed at advancing six key priorities identified in the order: protecting consumers and investors; safeguarding financial stability; combating illicit finance; strengthening U.S. leadership and competitiveness in the global economy; expanding financial inclusion; and fostering responsible innovation.
To date, nine reports have been delivered to the President in line with the Executive Order’s deadlines, incorporating insights from government, industry, academia, and civil society. Collectively, these reports outline a comprehensive framework for the responsible development of digital assets and set the stage for further action both domestically and internationally.
The recommendations urge agencies to foster innovation by supporting private-sector research and development and by helping leading U.S. firms secure positions in global markets. At the same time, they emphasize the need to address risks—through stronger enforcement of existing laws and the adoption of commonsense efficiency standards for cryptocurrency mining.
Given both the opportunities and challenges of a U.S. Central Bank Digital Currency (CBDC), the reports recommend that the Federal Reserve continue its research, experimentation, and evaluation in this area. They also call for the establishment of a Treasury-led interagency working group to bolster and coordinate the Federal Reserve’s efforts.
Protecting Consumers, Investors, and Businesses
Digital assets present significant risks to consumers, investors, and businesses alike. Their prices are highly volatile—the global cryptocurrency market today is worth roughly one-third of its peak value in November 2021. Misleading claims about asset features and expected returns remain common, while compliance with existing laws and regulations is often lacking.
Research shows that nearly one in four digital coin offerings suffers from transparency or disclosure issues, such as plagiarized documentation or false promises of guaranteed profits. Fraud, scams, and theft within digital asset markets are also on the rise. According to FBI data, reported financial losses from crypto-related scams in 2021 were almost 600 percent higher than in the previous year.
Since taking office, the Biden-Harris Administration—working alongside independent regulators—has prioritized protecting consumers and ensuring fairness in digital asset markets through new guidance, expanded enforcement resources, and aggressive action against fraud. Building on these efforts, the reports released today outline several additional steps:
- Strengthened Enforcement: Regulators such as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are encouraged to continue pursuing investigations and enforcement actions against unlawful practices in digital asset markets.
- Consumer Protection: The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) are urged to intensify oversight of consumer complaints and act against unfair, deceptive, or abusive practices.
- Updated Guidance and Rules: Agencies are encouraged to issue new guidance and regulations that address both current and emerging risks, while enhancing interagency collaboration to tackle pressing threats to consumers, investors, and businesses. This includes sharing data on consumer complaints to maximize enforcement effectiveness.
- Public Awareness: The Financial Literacy Education Commission (FLEC) will spearhead education efforts to help consumers better understand digital asset risks, recognize fraudulent schemes, and know how to report misconduct.
Promoting Access to Safe, Affordable Financial Services
Too many Americans remain excluded from the traditional financial system. An estimated 7 million people are unbanked, while another 24 million depend on expensive nonbank services—such as check-cashing or money orders—for basic financial needs. Even for those with bank accounts, traditional payment systems can be slow and costly, particularly for cross-border transactions.
The digital economy must serve all Americans by fostering financial services that are secure, reliable, affordable, and widely accessible. To advance this goal, the Federal Reserve is preparing to launch FedNow in 2023—a real-time, 24/7 interbank clearing system that will enhance nationwide instant payment infrastructure, complementing The Clearing House’s Real Time Payments network.
Digital assets also hold promise for improving payment speed and expanding access to financial services. However, additional work is required to ensure these innovations genuinely benefit underserved communities and guard against exploitative or predatory practices.
To promote safe and affordable financial services for all, the Administration plans to take the following steps:
- Agencies will encourage the adoption of instant payment systems, like FedNow, by supporting the development and use of innovative technologies by payment providers to increase access to instant payments, and using instant payment systems for their own transactions where appropriate – for example, in the context of distribution of disaster, emergency or other government-to-consumer payments.
- The President will also consider agency recommendations to create a federal framework to regulate nonbank payment providers.
- Agencies will prioritize efforts to improve the efficiency of cross-border payments by working to align global payments practices, regulations, and supervision protocols, while exploring new multilateral platforms that integrate instant payment systems.
- The National Science Foundation (NSF) will back research in technical and socio-technical disciplines and behavioral economics to ensure that digital asset ecosystems are designed to be usable, inclusive, equitable, and accessible by all.
Fostering Financial Stability - As digital assets become more integrated with the traditional financial system, they introduce new channels for market disruption and spillover risks. Stablecoins are a particular concern: without strong regulation, they could trigger destabilizing runs. This risk became evident in May 2022, when the collapse of the so-called stablecoin TerraUSD and the resulting bankruptcies wiped out nearly $600 billion in value.
- To address these vulnerabilities, the Financial Stability Oversight Council (FSOC) will release a report in October outlining the financial-stability risks posed by digital assets, highlighting regulatory gaps, and recommending additional measures to strengthen financial stability.
The Biden-Harris Administration has consistently recognized the importance of regulating digital assets to safeguard financial stability. In 2021, for example, the President’s Working Group on Financial Markets recommended steps for Congress and regulators to strengthen oversight of stablecoins. Building on that foundation, the Administration now plans to take the following additional actions:
- Strengthening Cyber Resilience: The Treasury will partner with financial institutions to enhance their ability to detect and mitigate cyber vulnerabilities, including by sharing information and promoting access to diverse data sets and analytical tools.
- Monitoring Strategic Risks: The Treasury, in coordination with other agencies, will work to identify, track, and analyze emerging risks in digital asset markets. These efforts will also extend internationally, with collaboration through organizations such as the Organization for Economic Co-operation and Development (OECD) and the Financial Stability Board (FSB).
Advancing Responsible Innovation
The United States has long been a global leader in innovation, and digital asset firms are no exception. As of 2022, U.S. companies account for nearly half of the world’s 100 most valuable financial technology firms, many of which are active in digital asset services.
The federal government has historically played a key role in fostering responsible private-sector innovation—by funding cutting-edge research, helping firms compete internationally, supporting compliance efforts, and working to mitigate unintended consequences of technological progress. Building on this legacy, the Administration plans the following steps to promote responsible digital asset innovation:
- Research and Development Agenda: The Office of Science and Technology Policy (OSTP) and the National Science Foundation (NSF) will establish a Digital Assets R&D Agenda. This will advance research on next-generation cryptography, transaction programmability, cybersecurity, privacy protections, and strategies to reduce digital assets’ environmental impacts. NSF will also continue supporting efforts to bring technological breakthroughs to market, as well as social-science and education research to inform, educate, and train diverse stakeholders in safe and responsible digital asset use.
- Regulatory Guidance and Support: The Treasury and financial regulators are encouraged to provide U.S. fintech innovators with regulatory guidance, best practices, and technical assistance—using tools such as tech sprints and Innovation Hours.
- Environmental Safeguards: The Department of Energy, the Environmental Protection Agency, and other agencies will further monitor the environmental impacts of digital assets, develop performance standards where appropriate, and equip local authorities with tools to mitigate harms. Crypto-asset mining consumes significant electricity, which can drive greenhouse gas emissions, strain power grids, and create noise and water pollution. At the same time, opportunities exist to align digital asset development with the transition to a net-zero economy and broader environmental justice goals.
- Public-Private Collaboration: The Department of Commerce will explore creating a standing forum to bring together federal agencies, industry leaders, academics, and civil society. This platform would help exchange knowledge and ideas to inform regulation, standards, technical assistance, and research.
Reinforcing U.S. Global Financial Leadership and Competitiveness
Around the world, standard-setting bodies are shaping policies and regulations for digital assets. The United States is actively engaging with international partners to ensure these rules reflect U.S. goals and values while reinforcing America’s central role in the global financial system. At the same time, the U.S. has an important opportunity to support countries still developing their digital asset ecosystems—helping them build financial, legal, and technological infrastructures that uphold data privacy, financial stability, and human rights.
To strengthen U.S. financial leadership and embed American values in global digital asset markets, the Administration will take the following steps, consistent with the Treasury Department’s framework for international engagement released earlier this summer:
- Leadership in International Forums: U.S. agencies will use their positions in global organizations to advance U.S. priorities on digital assets and expand leadership roles in bodies such as the G7, G20, OECD, FSB, FATF, and the International Organization for Standardization. They will advocate for standards and frameworks that reflect values like data privacy, open and efficient markets, financial stability, consumer protection, strong law enforcement, and environmental sustainability.
- Stronger Global Enforcement: The State Department, Department of Justice (DOJ), and other enforcement agencies will deepen cooperation with foreign counterparts through global enforcement networks such as the Egmont Group, bilateral information sharing, and capacity-building initiatives.
- Support for Developing Economies: The State Department, Treasury, USAID, and other agencies will consider providing technical assistance to countries building digital asset infrastructure and services. This may include guidance on legal and regulatory frameworks, as well as knowledge-sharing on risks, impacts, and opportunities.
- Expanding Market Access: The Department of Commerce will assist leading U.S. financial technology and digital asset firms in securing entry and growth opportunities in global markets.
Fighting Illicit Finance
The United States has been at the forefront of applying its anti-money laundering and countering the financing of terrorism (AML/CFT) framework to the digital asset ecosystem. Efforts to date include publishing guidance, maintaining regular public–private dialogue, deploying enforcement tools, and driving international AML/CFT standard-setting. These measures have strengthened the U.S. financial system, but risks remain.
Because many digital assets are pseudonymous and transferable without intermediaries, they have been exploited by bad actors for money laundering, terrorist financing, weapons proliferation, and other crimes. Digital assets have enabled ransomware operations, narcotics trafficking and laundering schemes, and the financing of rogue regimes—such as the recent thefts attributed to the Lazarus Group, a hacking organization affiliated with the Democratic People’s Republic of Korea (DPRK).
It is in the national interest to mitigate illicit-finance risks in digital assets through regulation, oversight, enforcement, and the use of other federal authorities. To strengthen the fight against criminal misuse of digital assets, the Administration plans to take the following actions:
- Legislative Updates: The President will consider urging Congress to amend the Bank Secrecy Act (BSA), anti–tip-off statutes, and laws against unlicensed money transmission to explicitly cover digital asset service providers—including exchanges and non-fungible token (NFT) platforms. He may also call on Congress to increase penalties for unlicensed money transmission to align with other money-laundering offenses and to amend relevant statutes so the Department of Justice can prosecute digital asset crimes wherever victims are located.
- Risk Assessments: The U.S. will continue monitoring the digital asset sector to identify gaps in legal, regulatory, and supervisory frameworks. As part of this effort, Treasury will release an illicit-finance risk assessment on decentralized finance by February 2023 and a similar assessment on NFTs by July 2023.
- Disrupting Illicit Actors: Agencies will continue to expose, disrupt, and hold accountable cybercriminals and other malign actors misusing digital assets. These efforts will also target nodes in the ecosystem that pose national security risks.
- Public–Private Engagement: Treasury will strengthen dialogue with the private sector to ensure firms understand their obligations and associated risks, encourage information sharing, and promote the use of emerging technologies to improve compliance. A forthcoming Request for Comment in the Federal Register will solicit input on several AML/CFT-related issues.
- Comprehensive Risk Mapping: To inform these actions, the Treasury, DOJ/FBI, DHS, and NSF have prepared risk assessments offering a consolidated view of illicit-finance threats in digital assets. The Consumer Financial Protection Bureau (CFPB) has also provided insights into related consumer risks. These assessments highlight threats such as money laundering, terrorist financing, large-scale hacks, and vulnerabilities linked to rapid technological change and industry practices.
Exploring a U.S. Central Bank Digital Currency (CBDC)
A U.S. Central Bank Digital Currency (CBDC)—a digital form of the U.S. dollar—could deliver significant benefits. It has the potential to create a more efficient payment system, spur technological innovation, enable faster cross-border transactions, and support environmentally sustainable solutions. A CBDC could also promote financial inclusion by expanding access to underserved communities, foster economic growth and stability, reduce cyber and operational risks, safeguard sensitive data, and limit illicit financial activity. Additionally, it could help preserve U.S. leadership in the global financial system and strengthen the effectiveness of sanctions. At the same time, policymakers recognize that a CBDC could pose risks, such as triggering runs during periods of financial stress.
To prepare for this possibility, the Administration has established Policy Objectives for a U.S. CBDC System, which outline federal priorities for any potential implementation. A CBDC system should protect consumers, promote economic growth, modernize payment systems, ensure interoperability with other platforms, expand financial inclusion, safeguard national security, respect human rights, and align with democratic values.
Further research and development are essential to evaluate the technological foundation of a CBDC. The Administration encourages the Federal Reserve to continue its ongoing research, experimentation, and assessment. To complement these efforts, the Treasury will lead an interagency working group to assess the implications of a U.S. CBDC, harness cross-government expertise, and coordinate with international partners. Senior leadership from the Federal Reserve, National Economic Council, National Security Council, Office of Science and Technology Policy, and Treasury will meet regularly to review progress and share updates on CBDC and broader payments innovations.
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