Home Policy & Governance White House publishes ‘comprehensive framework’ for digital assets

White House publishes ‘comprehensive framework’ for digital assets

US dollars: the framework's publication comes just over six months after the White House's executive order | Credit: Brett Hondow; Pixabay

The White House has published a ‘comprehensive framework’ for the responsible development of digital assets.

The move comes just over six months after it issued an executive order setting out a national policy for digital assets across six priorities, as well as calling for ‘urgency’ on exploration of the case for a digital dollar.

President Joe Biden signed the order on ‘ensuring responsible innovation in digital assets’ – described as the US’s first ‘whole-of-government strategy to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology’  on 9 March.

The White House states that agencies across government have worked together over the past six months to develop frameworks and policy recommendations that advance the six key priorities identified in the executive order: consumer and investor protection; promoting financial stability; countering illicit finance; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

Nine reports have been submitted to the President to date that, the White House states, together ‘articulate a clear framework for responsible digital asset development and pave the way for further action at home and abroad’.

Regulators urged to ‘aggressively pursue’ law-breaking

In respect of consumer and investor protection, regulators such as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are encouraged to ‘aggressively pursue investigations and enforcement actions’ against unlawful practices in the digital assets space; and the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) are urged ‘to redouble their efforts to monitor consumer complaints and to enforce against unfair, deceptive or abusive practices’.

Agencies are also encouraged to issue guidance and rules to address ‘current and emergent’ risks in the digital asset ecosystem, while regulatory and law enforcement agencies are also urged to collaborate to ‘address acute digital assets risks facing consumers, investors and businesses’. The Financial Literacy Education Commission (FLEC) will lead public-awareness efforts to ‘help consumers understand the risks involved with digital assets, identify common fraudulent practices and learn how to report misconduct’.

In terms of central bank digital currency (CBDC) development, the US is lagging nations including China, where authorities have been stepping up their efforts to promote the digital yuan. The European Central Bank (ECB), meanwhile, is mid-way through a two-year ‘investigation phase’ into a potential CBDC for the 19-member eurozone.

The Federal Reserve is encouraged to continue its CBDC research, experimentation and evaluation with a new Treasury-led inter-agency working group supporting its efforts. This group will ‘consider the potential implications of a US CBDC, leverage cross-government technical expertise and share information with partners’.

The leadership of the Fed, National Economic Council, National Security Council, Office of Science and Technology Policy and the Treasury Department will meet regularly to discuss the working group’s progress and share updates on CDBC and ‘other payments innovations’, the White House states.

Instant payments for government transactions

In further payments-related steps, the White House communication states that agencies will encourage the adoption of instant payment systems, such as FedNow – the round-the-clock real-time payment and settlement service that the Federal Reserve Banks are developing to support faster payments across the US.

It will do this by supporting the development and use of innovative technologies by payment providers to increase access to instant payments, as well as 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 non-bank payment providers’.

The National Science Foundation (NSF) will back research in technical and socio-technical disciplines and behavioural economics ‘to ensure that digital asset ecosystems are designed to be usable, inclusive, equitable and accessible by all’.

The Department of Commerce will help ‘cutting-edge US fintech and digital asset firms find a foothold in global markets for their products’, while the Treasury and financial regulators are encouraged to provide innovative US firms developing new fintech services with regulatory guidance, best-practices sharing, and technical assistance through initiatives such ‘tech sprints’ and ‘Innovation Hours’. Pre-existing examples of the latter include monthly virtual meetings run by FinCEN (the Financial Crimes Enforcement Network).

Tracking risks and boosting research

The Treasury will also work with other agencies to ‘identify, track and analyse’ what the White House describes as ‘emerging strategic risks that relate to digital asset markets’. It will collaborate on identifying such risks with US allies, including through international organisations such as the Organisation for Economic Co-operation and Development (OECD) and the Financial Stability Board (FSB).

The Office of Science and Technology Policy (OSTP) and NSF will develop a ‘Digital Assets Research and Development Agenda’ to kick-start research on topics such as next-generation cryptography, transaction programmability, cybersecurity and privacy protections, and ways to mitigate the environmental impacts of digital assets. It will also continue to support research that translates technological breakthroughs into market-ready products.  

The Department of Energy, the Environmental Protection Agency and other agencies will consider further tracking digital assets’ environmental impacts, developing performance standards ‘as appropriate’, and providing local authorities with the tools, resources and expertise to mitigate environmental harms.

The State Department, Treasury, USAID (US Agency for International Development) and other agencies will ‘explore further technical assistance to developing countries building out digital asset infrastructure and services’. The White House states that this assistance may include technical assistance on legal and regulatory frameworks, evidence-gathering and knowledge-sharing on the impacts, risks and opportunities of digital assets.

The Financial Stability Oversight Council (FSOC), established in the wake of the global financial crisis 15 years ago, is due to publish a report next month on digital assets’ financial-stability risks, identifying related regulatory gaps, and making additional recommendations to foster financial stability.

The Treasury, meanwhile, is scheduled to complete an illicit finance risk assessment on decentralised finance by the end of February 2023 and an assessment on non-fungible tokens (NFTs) by July 2023. NFTs are ‘one-of-a-kind’ digital assets that exist on a blockchain.


‘White House sets out cross-government digital assets strategy’ – our news story (11 March 2022) on the executive order, which stated that digital assets’ growth ‘creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security and climate risk’

‘US DoJ appoints digital assets prosecutor to head crypto crimes team’ – our news story (28 February 2022) on the appointment of Eun Young Choi as inaugural director of the Department of Justice’s newly created National Cryptocurrency Enforcement Team (NCET) to spearhead an intensification of efforts to tackle digital asset crimes

‘Boston Fed and MIT release digital currency tech research’ – our news story (15 February 2022) on the Federal Reserve Bank of Boston and Massachusetts Institute of Technology’s (MIT) Digital Currency Initiative (DCI) publishing initial findings of multi-stage research into CBDC technology

‘Federal Reserve CBDC consultation paper asks 22 questions’ – our news story (21 January 2022) on the release of a 40-page ‘Money and Payments: the US Dollar in the Age of Digital Transformation’ document