You can get a link to the report itself, as well as a quick summary of wider reactions to the report, from this Bitcoin magazine article.

It looks like everyone's losing their heads about the Strategic Bitcoin reserve, but I've got an eye towards the long-term consequences implied by this report.

It was a bit surreal reading all of this in black and white. I've seen so much cryptotwitter and podcast commentary about some of the topics discussed in this report, that there's almost a sense of dislocation to see it written in such a formal context.

I'll also comment that they threw in a "Crypto 101" explainer on Page 13 and it's nice to see an accurate, clear and non-distorted explainer of crypto in an official document. They go out of their way to clarify common mis-conceptions such as the one that Bitcoin miners hold tokens on behalf of people. They reference crypto-native organisations and resources like DefiLlama, Messari, Consensys and the Bitcoin Whitepaper. They even do an up-to-date nod to newer trends like Real World Assets (RWAs), quantum safety and a balanced over-view of the risks of crypto.

Here are some quotes that stand out to me as particularly pertinent to the future of finance:

Policymakers and market regulators should lay the groundwork for American digital asset markets to become the deepest and most liquid in the world.

U.S. dollar-backed stablecoins represent the next wave of innovation in payments, and policymakers should encourage their adoption to advance U.S. dollar dominance in the digital age.

Using crypto to preserve US dollar dominance spawned on cryptotwitter about a year ago. It was thought to be one of the major selling points for crypto to flip Trump. It's also really important to note that using stablecoins - that can be seized or frozen from your wallet - is basically the same as a CBDC, despite the noises about banning the latter. (see below)

Congress should enact legislation prohibiting the adoption of any CBDCs in the United States. Internationally, the United States should urge other countries to adopt policies that promote the role of the private sector in upgrading payments and financial systems.

The US will use its hegemony status to make it more difficult for other countries to develop their own CBDC, furthering the cause of cryptocurrency, furthering the cause of cryptocurrency and its own dominance in a single stroke. I'd be bullish, if I wasn't terrified of what they're going to be capable of using stablecoins. I've already seen cryptotwitter speculation about the collapse of other currencies.

Treasury and the IRS should publish guidance on several topics, including the determination of "adjusted financial statement income" with respect to financial accounting unrealized gains and losses on investment assets other than stock and partnership interests, whether wrapping and unwrapping transactions are taxable transactions, and de minimis receipts of digital assets.

Genuinely some common-sense stuff in here. Logically, wrapping transactions are sort of like sending money between banks, which are not taxable. Reference to de minimis receipts of digital assets - tiny, insignificant amounts - also seems sensible because there is a lot of that going on. Hopefully some good, practical user-oriented clarity comes out of this one.

Congress should enact legislation affirming that individuals can custody their own digital assets without a financial intermediary and engage in lawful peer-to-peer transactions using those assets.

Writing into law the rights of self-custody and use of lawful use of crypto would be pretty critical. Especially given prior ill-informed attempts to make it illegal. Crypto can't fully be banned, but it would be nice to see one of its core tenants enshrined in law.

Congress should codify principles regarding how control over an asset impacts Bank Secrecy Act obligations, particularly for money transmitters. A software provider that does not maintain total independent control over value should not be considered in money transmission for purposes of the BSA.

This one's going to be an interesting one, since the Bank Secrecy Act requires financial institutions to store records for the purposes of financial crime. If it's all on the blockchain, then there is no need to retain records. "Software Provider" and "does not maintain total independent control over value" seems to refer to devs, and how decentralised that project is, and seems to protect them? I'm not an expert on this though, so I'm happy to be corrected.

Evaluate the digital asset ecosystem, including existing identity credentialing tools and technical aspects of digital asset services, to determine potential approaches for defining, mandating, and enforcing customer identification programs and evaluate the potential efficacy of such schemes in detecting, deterring, and investigating fraudulent transactions.

There are some genuinely philosophical and terrifying schools of thought regarding identity coming out of crypto, and if the US government harvests the tech of some of them, it's a coin toss as to whether it will be horribly dystopic or genuinely decentralised.

The digital asset system should harness the power of standards to solve coordination problems without government intervention. Technical standards are already relevant to the digital asset ecosystem. Various technical organisations ... have released or are developing technical standards relevant to Distributed Ledger Technologies ... have played important roles in standardizing smart contracts and addressing within DLT systems ...

This is really important, but admittedly not very trendy. Standards like those maintained by ISO, W3C and others are actually a form of decentralisation. You're centralising a body of knowledge of how to do things, true, but then that knowledge is distributed without too much intervention from others, and used to keep our buildings, systems, and products safer and more robust. Every time there is a hack on DeFi, that shizz should be thrown into a standard ASAP, and make cryptocurrency stronger.

The report also proposes a taxonomy of crypto that makes a lot of sense, and proposes some common-sense jurisdictions for them.

• Securities tokens: the report highlights the nuance that not all crypto tokens are securities, does it's due diligence by mentioning the Howey Test, and says that if you're a centralised exchange you're regulated as a security,

• Commodity Tokens: The report acknowledges Bitcoin and Ethereum as commodities and within the jurisdiction of the CFTC, as well as derivatives such as futures, options, and swaps.

• Network tokens: refers to tokens whose function is connected to the running of a network or protocol, that is sufficiently decentralised and its value is not dependent on the intervention of a single party.

• Tokens for Commercial and Consumer Use: a big bucket that includes NFTs, loyalty points, event tickets, trading cards, etc.

The SEC should consider ... establish a fit-for purpose exemption from registration under Section 5 of the Securities Act for securities distributions involving digital assets ... established a time-limited safe harbour or exemption from certain securities law requirements for transactions ... because they are not yet fully functional or associated with a sufficiently decentralised network to allow for progressive functionality or decentralisation ... establish safe harbour for certain airdrops ... exemption for distributions of digital assets by decentralised physical infrastructure (DePIN)

The SEC and the CFTC should coordinate to ensure efficient rulemaking processes.

The SEC and CFTC should coordinate on seeking comments from the public on suggestions for rulemaking.

If the SEC and CFTC establish a regulatory sandbox or safe harbour, it should have clear criteria to determine which types of digital assets and market participants are eligible for the sandbox or safe harbour.

The SEC and CFTC should explore offering flexibility to allow registrants to offer multiple services within a single user interface.

Moreover, there should be a clear pathway for entities to graduate from the sandbox or safe harbour.

The language here definitely seems to indicate that the SEC and CFTC are being yelled at to bloody cooperate or else. Honestly? Fair call though. The SEC went and did their own thing for years and ignored the fact that Bitcoin and Ethereum have properties of commodities.

This "safe harbour" idea has been batted around crypto podcast circles for some time. It's the idea that no project can start 100% decentralised - for example, Bitcoin started out under the control of Satoshi and his collaborators on the mailing list, and then he slowly ceded control to others, until he disappeared altogether. Therefore, new projects must be given time to set up a similar trajectory, without being subject to irrelevant regulation such as being sued for selling illegal securities. While I am mildly disappointed that no further details on what that would look like has come through yet, I am sure that it will in time. I'm also encouraged by the pragmatic language used here, and the nuanced mention of difficult edge-cases (DePIN, airdrops and multiple services within a single user interface).

Not a lot in there that we didn't already know, and what was written was hidden right at the end of the report. They are going to have a "Strategic Bitcoin Reserve" and also a "United States Digital Asset Stockpile", which will be administered by Treasury, capitalised by seized assets (ie: proceeds of crime). Some waffle about budget neutral acquisitions. Given the no-coiner public opinions I've seen on the matter, it's probably sensible that they stopped short there. If they started buying Bitcoin with taxpayer money, there would have been a public outcry.

It's going to be an interesting year for crypto as the US gets itself out of its regulatory tangle and investment in the space starts in earnest. The US appears to be set on a path of turning crypto into a tool for the preservation of its hegemony, then it probably will, come hell or high water. I will be keeping an eye out for projects that generate stablecoins in a non-algorithmic, and decentralised manner, because I don't actually think present-day stablecoins are actually a good thing for the space. They can be taken from your wallet and as such have the same bad trust assumptions as digital cash.

I will be asking myself "have we lost?" a lot in the coming year, in terms of some key crypto ideals. But that's a topic for a separate article.

As always, please send me feedback for this article on BlueSky, X, or Substack.

Sheila

This report was 116 pages long and simply too big to ChatGPT to summarise accurately. Even asking it to summarise chapter-by-chapter summaries produced garbage. So if the legalese got too dense, I copied paragraphs into it and asked it to analyse it, particularly with reference to Taxonomy of tokens, then I referred to its output and the original text to hand-write the article.

After I'd written the bulk of this article, GPT-5 came out and I used it to write my BlueSky threads.