Over the weekend, the Trump administration released the U.S. Digital Asset Policy Report, a long-awaited milestone representing a significant departure from the approach of the prior administration. Culminating six months of intensive discussions with industry stakeholders, the report reflects a comprehensive and highly supportive stance toward the growth and responsible integration of digital assets and blockchain technology in the U.S. financial system, which could have positive implications for the crypto industry worldwide.
Regulatory Clarity and Market Structure. The report marks a decisive move toward regulatory clarity in the U.S. digital asset ecosystem, particularly by refining the definition of what constitutes a “security.” Under the new policy, the SEC will apply established legal tests-most notably the Howey Test-with a renewed focus on predictability and precision. This approach narrows the scope of what is considered a security, meaning that not all crypto-assets will automatically fall under securities regulation. Instead, only those digital assets that meet the specific criteria of an investment contract or otherwise fit within the statutory definition of a security will be regulated as such. This shift is intended to reduce ambiguity, allowing market participants to better assess their compliance obligations and risks. We note that this approach still needs to be further developed and better defined.
Shift from Regulation by Enforcement to Regulation by Clarity. The report signals a fundamental change in regulatory strategy, moving away from the previous era of “regulation by enforcement,” where rules were set through ad hoc enforcement actions and litigation. Instead, the SEC and CFTC are now directed to use their rulemaking and exemptive authorities to provide explicit, fit-for-purpose frameworks for digital assets. This includes the introduction of safe harbors, clear exemptions, and tailored disclosure requirements. The goal is to foster innovation, protect consumers, and ensure market integrity, while reducing the risk of driving legitimate businesses offshore due to regulatory uncertainty.
Stablecoins and Payment. Stablecoins are recognized as a cornerstone of digital payments innovation, with the report emphasizing the need for robust, high-quality, and liquid reserve backing for dollar-based stablecoins. The new framework, as codified in recent legislation (“the Genius Act”), requires stablecoin issuers to be licensed in the U.S. or meet equivalent foreign standards, and mandates monthly reserve disclosures and redemption rights for holders. Importantly, payment stablecoins issued by U.S.-licensed entities are not treated as securities or commodities, providing much-needed regulatory certainty. The report also highlights the importance of stablecoins in maintaining U.S. dollar dominance in global digital payments and encourages cross-border interoperability.
Tokenized Equities. The report affirms that tokenization of equities does not alter the legal character of equities; they remain securities and are subject to all applicable registration, disclosure, and custody requirements. The SEC is encouraged to modernize transfer agent and trading rules to accommodate blockchain-based securities, and to use its exemptive authority to facilitate innovation in issuance and trading. The report also calls for capital and liquidity treatment of tokenized equities to be consistent with their non-tokenized counterparts, ensuring a level playing field for market participants.
DeFi (Decentralized Finance). The report adopts a nuanced approach to DeFi, recognizing its potential to drive financial innovation while also presenting unique regulatory challenges. It recommends that regulation focus on the degree of control exercised by software applications and the extent to which they can comply with existing obligations. Where DeFi protocols are truly decentralized and lack a controlling intermediary, they may not be subject to the same regulatory requirements as traditional financial institutions. However, the report cautions against allowing actors to structure products to evade legal responsibilities and calls for tailored, technology-appropriate regulatory solutions.
Pro-Innovation, Technology-Neutral Approach. A central theme of the report is the adoption of a pro-innovation, technology-neutral regulatory philosophy. The report explicitly rejects discrimination against lawful digital asset businesses and emphasizes that regulatory frameworks should focus on the underlying risks of activities, not the technology used. This approach extends to banking, capital, and prudential standards, with recommendations to treat tokenized assets and blockchain-based activities in a manner consistent with their traditional analogs. The report also encourages U.S. leadership in international standard-setting to ensure that global frameworks reflect American values and interests.
Recommended Next Steps. The report recommends that Congress and federal agencies move swiftly to enact and implement legislation that codifies these principles, including clarifying the regulatory perimeter for digital assets, modernizing securities and commodities laws, and providing clear guidance for stablecoins, tokenized assets, and DeFi. Agencies are urged to issue further guidance on technical best practices, risk management, and compliance, and to ensure that supervisory expectations are consistent and technology-neutral. Market participants should closely monitor regulatory developments, engage in public consultations, and prepare to adapt their operations to the evolving legal landscape.
Global Ripple Effects: Implications for Israel. The U.S. policy shift is expected to have significant global ripple effects, particularly for jurisdictions like Israel that are closely integrated with U.S. financial markets and technology sectors. As the U.S. establishes clearer, more innovation-friendly rules, it sets a benchmark for international best practices and regulatory harmonization. Israeli regulators and market participants are expected to track U.S. developments, as alignment with these standards will be critical for cross-border business, investment, and compliance. Proactive engagement with U.S. counterparts and adaptation of local frameworks to reflect these changes will help ensure continued access to global capital and technology flows and further enhance Israel’s already vibrant blockchain and crypto ecosystem.
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