Author: Heechang Four Pillars

Translation: Deep Tide TechFlow

Key Points

The Executive Order 14178 Working Group released a 166-page report today outlining how the U.S. can lead the blockchain industry and embrace the 'Crypto Golden Age.'

The core content of the report can be summarized in four key points: (i) Establish a unified classification framework for the digital asset market; (ii) Foster interconnectivity between the banking and blockchain industries; (iii) Accelerate the adoption of stablecoins; (iv) Develop guidelines for illegal financial activities and taxation.

The momentum for change is becoming increasingly evident. The collaboration between traditional financial institutions (such as JPMorgan) and blockchain-based platforms (such as Coinbase and Robinhood) is showcasing an important trend towards practical financial innovation.

Although countries like the U.S. lead in this field, South Korea should also take more action and maintain an open attitude—essentially saying, 'Let’s seriously study and try to understand all this.' Only by starting to understand now can one avoid being left behind in the wave of rapid change.

1. Identify the trend of blockchain to lead the way

In the U.S., the government is actively recognizing the potential of blockchain and digital assets and is vigorously promoting initiatives. On January 23, 2025, President Donald Trump issued Executive Order 14178, 'Strengthening U.S. Leadership in Digital Financial Technology,' which established clear regulatory guidelines and encouraged innovation in the field. Following this order, the Executive Order 14178 Working Group released a 166-page report outlining how the U.S. can lead the blockchain industry and embrace the 'Crypto Golden Age.'

The report reviews the U.S.'s long tradition of technological innovation and assesses that blockchain and digital assets (cryptocurrencies) have the potential to fundamentally change the financial system and the structure of asset ownership. It also points out that overly restrictive measures, such as the previous government's so-called 'Operation Choke Point 2.0,' have excluded compliant cryptocurrency companies from the banking system. The report suggests that future governments should actively support business activities related to these innovative technologies rather than suppressing them.

The report adheres to the spirit of Executive Order 14178, emphasizing that U.S. regulators should promote innovation through clear and consistent rules and attract crypto companies to operate domestically. It urges agencies like the SEC and CFTC to collaborate to establish clear standards and a unified classification framework to eliminate regulatory gaps. At the same time, the report suggests adopting a technology-neutral and flexible regulatory approach in emerging fields such as decentralized finance (DeFi) to ensure that innovation is not stifled by outdated rules.

Source: Strengthening U.S. Leadership in Digital Financial Technology - The White House

Meanwhile, Hong Kong has also responded swiftly, following suit. In June 2023, the Hong Kong government officially implemented a licensing system for virtual asset exchanges, aimed at regulating cryptocurrency trading while allowing retail investors to participate to a limited extent. In May 2025, the bill passed Asia's leading 'Stablecoin Act,' which sets institutional establishment licensing requirements for stablecoins pegged to fiat currencies, and will officially take effect on August 1, 2025. Thanks to this 'regulatory and innovation-friendly coexistence,' Hong Kong is expected to promote blockchain development and become one of Asia's leading digital asset centers.

2. The key information from the report 'Strengthening U.S. Leadership in Digital Financial Technology'

Since the Trump administration took office, sentiments toward cryptocurrencies in the U.S. have changed. A survey conducted as of June 2025 showed that 72% of cryptocurrency investors support President Trump's relevant policies, and more than one-fifth of Americans now hold some form of cryptocurrency. Among these investors, 64% stated that the government's pro-crypto stance makes them more inclined to invest in cryptocurrencies than before. This optimistic sentiment is also spreading to institutional investors: a poll shows that 83% of institutional investors plan to increase their allocation to digital assets in 2025.

This data indicates that a more friendly regulatory environment is injecting new vitality into the crypto industry. Under the government's proposed slogan of 'supporting responsible innovation and growth,' the report repeatedly emphasizes that by implementing friendly crypto policies and establishing a clear regulatory environment, the U.S. is expected to take a leading position in the upcoming blockchain revolution.

The core content of the report can be summarized in four key points. Let’s explore each one in depth.

2.1 Establish a Unified Classification Framework for the Digital Asset Market

This section explores the legal and regulatory classification of digital assets and methods to improve market structure. Currently, the U.S. lacks clear standards to define whether a cryptocurrency is a security or a commodity. This ambiguity has led to jurisdictional conflicts between regulatory agencies (such as the SEC and the CFTC) and left gaps of overlapping regulation. The report states, 'The lack of a comprehensive classification framework leads to a chaotic variety of interpretations, making good-faith participants who are trying to comply feel like they are walking through a minefield,' highlighting the urgent need to establish a clear and unified classification system for digital assets.

For example, digital tokens used for fundraising may be considered securities (investment contracts) when sold, but once sufficiently decentralized, some believe they should no longer be classified as securities. Currently, there is no standard that can account for this dynamic change throughout a project's lifecycle. This creates significant uncertainty for projects as it becomes difficult to predict which laws will apply over time.

In this context, the report acknowledges the proposed CLARITY Act. This act was passed in the U.S. House of Representatives in 2025 with bipartisan support. The CLARITY Act classifies digital assets into security tokens and non-security (commodity) tokens, clearly assigning jurisdiction over the former to the U.S. Securities and Exchange Commission (SEC) and jurisdiction over the latter and the cryptocurrency spot market to the U.S. Commodity Futures Trading Commission (CFTC). The act also includes provisions protecting Americans' rights to self-custody assets and conduct peer-to-peer transactions, recognizing the value of decentralized governance and decentralized finance (DeFi).

The report notes that the CLARITY Act will lay a good foundation for the 'structure of the U.S. digital asset market,' but also suggests making some improvements during the legislative process. First, the report emphasizes the need to clarify the legal status of fully decentralized protocols. It provides legislators with several factors to consider, such as:

  • Whether the given software protocol imposes any actual 'control' over user assets;

  • Whether the protocol can technically be changed or upgraded;

  • Whether there are centralized operators or governance structures;

  • And whether current regulatory obligations can be technically enforced.

In light of these standards, the report argues that truly decentralized projects cannot be regulated like traditional intermediaries, thus requiring a new approach. Regulators should develop a flexible framework that achieves policy objectives while avoiding stifling innovation.

The report hopes that the CLARITY Act can provide a foundation for this and urges Congress to swiftly enact the bill. It also suggests that before the bill is officially implemented, regulatory agencies should use their existing authority to take immediate steps to provide participants with greater regulatory transparency.

2.2 The banking sector and blockchain sector should be interconnected

This section discusses the integration of the banking sector and the cryptocurrency industry, providing policy recommendations on how U.S. banks can expand their participation in digital assets under prudent regulation. The report mentions the previous government's actions to cut off banking services to cryptocurrency companies—referred to as 'Operation Choke Point 2.0'—and critiques it as an attempt to stifle their development by pushing legitimate industries out of the banking system.

The report points out that this top-down pressure has led many U.S. cryptocurrency companies to face issues like bank account closures, resulting in consumer harm and unexpected side effects such as the growth of unregulated 'shadow' markets.

The report emphasizes that banks can significantly improve efficiency and reduce costs by utilizing blockchain technology. For example, integrating distributed ledgers into payment and settlement systems can achieve 24/7 real-time payments and atomic settlements, thus eliminating the restrictions of business hours and lowering costs associated with central clearinghouses. Some major banks have been moving in this direction, testing their digital dollar tokens or blockchain platforms for bond settlements.

The recommendations presented in this section of the report include:

  • Clarify the permitted crypto-related activities for banks and restore initiatives like the Regulatory Innovation Office to provide guidance for banks in this area.

  • Enhance the transparency of bank license approval and Federal Reserve account application processes to facilitate the entry of new enterprises while avoiding unfairly blocking existing banks from serving crypto clients;

  • Combine bank capital requirements with actual risk and develop regulatory guidance for new risk exposures such as tokenized assets.

2.3 Stablecoins should be viewed as innovative digital tools and actively promoted

This section focuses on stablecoins in the context of digital payment innovations and how they reinforce the dollar's dominant position. Stablecoins are crypto assets with stable value designed to maintain a 1:1 peg with fiat currencies like the dollar. Due to their lower price volatility, they effectively serve as digital cash in the crypto ecosystem.

The report assesses that the widespread use of stablecoins pegged to the dollar can modernize payment infrastructure and help the U.S. break free from its increasingly aging traditional payment networks. For instance, using stablecoins for international remittances or securities settlements can achieve near-instant processing without intermediary banks and significantly lower costs. This will also enhance the international influence of the dollar. Currently, dollar-pegged stablecoins capture a significant share of global cryptocurrency trading volume, with circulation reaching hundreds of billions of dollars. The report emphasizes that to lead this trend, the U.S. must establish a clear federal stablecoin regulatory framework.

In this context, the report highlights the 'GENIUS Act,' which guides and establishes a national innovation framework for U.S. stablecoins, passed by Congress this year. The GENIUS Act (i) establishes a system for private dollar stablecoin issuance institutions approved and regulated by the Federal Reserve; (ii) prohibits the Federal Reserve from developing a central bank digital currency (CBDC), thereby clearly favoring private-sector-led digital dollar innovation. The report praises the GENIUS Act for 'incorporating a framework conducive to innovation into federal law' and strongly urges the Treasury and other relevant agencies to seriously and promptly implement the act.

The report also points out that while establishing stablecoin rules, addressing tax issues is also crucial. Under current U.S. tax law, the definition of stablecoins is not clear, and their tax treatment may vary depending on whether they are considered currency or property. The report indicates that this ambiguity imposes burdens on participants, so once the federal stablecoin regulatory framework is in place, tax laws should be updated to clarify the classification of stablecoins to eliminate uncertainty.

The core message of this section can be summarized as: 'Actively promote stablecoins as a means of digital dollar innovation, firmly reject central bank digital currencies (CBDCs), as they threaten U.S. freedom and financial stability.' Regarding stablecoins, the report urges strict enforcement of the newly enacted GENIUS Act and suggests additional legislation as necessary to strengthen privacy protection and consumer safeguards.

The report also emphasizes that the U.S. should lead the formulation of global standards for stablecoins internationally and promote cross-border payment innovations.

2.4 Guidelines for illegal financial activities and taxation must be established

This section discusses illegal financial risks associated with cryptocurrencies (such as money laundering, terrorist financing, tax evasion, etc.) and the measures to address them. The report begins by stating, 'To embrace innovation while ensuring national security, we must modernize anti-money laundering (AML) standards,' and analyzes the vulnerabilities in the current system.

Due to the anonymity, borderless nature, and real-time execution of cryptocurrency transactions, the report acknowledges that enforcing laws established for traditional banking (such as the Bank Secrecy Act (BSA) or the 'Travel Rule') faces challenges. For example, criminals may use decentralized exchanges or mixing services to repeatedly swap or split funds, making transactions difficult to trace. The report cites specific cases—such as the abuse of decentralized finance (DeFi) by North Korean hacking groups in 2022 and ransomware attackers demanding cryptocurrency payments—to illustrate that current anti-money laundering (AML) mechanisms need updating to address these new strategies.

At the same time, the report emphasizes multiple times that AML and counter-terrorist financing (CFT) enforcement should not be abused to deviate from the law's original intent. If AML regulations are used for political purposes or to suppress specific industries, it will only undermine public trust in the financial system. Therefore, regulators themselves should operate under democratic oversight and transparency and clearly articulate guidelines to avoid unfair restrictions on legitimate businesses and users.

The final part of this section proposes solutions to the ambiguities and uncertainties related to the taxation of digital assets. The report points out that although the IRS generally classifies cryptocurrencies as property, it has yet to establish specific tax guidelines for new activities such as staking, mining, airdrops, or token wrapping. This lack of clarity is causing significant confusion for taxpayers. The report urges the IRS and the Treasury to issue clearer, more practical tax guidance and suggests considering a tax exemption for small cryptocurrency transactions to avoid penalizing users for using cryptocurrency for everyday payments.

3. Let more people better understand cryptocurrency

Source: X (@glxyresearch)

Many countries and companies (the U.S. being a typical example) are rushing to announce and implement blockchain strategies, not merely to follow a trend, but because they have anticipated the trajectory of market development and are preparing in advance. In the U.S., companies like Messari, Delphi, Galaxy Research, and rwa.xyz have consistently provided high-quality research to help institutions formulate forward-looking strategies for blockchain and digital assets. Protocols like Ondo Finance and Morpho have built secure on-chain financial services, while companies like BitGo and Coinbase provide reliable infrastructure that allows institutions to invest in crypto assets.

In contrast, South Korea still lacks a fundamental understanding and preparedness for the blockchain industry (with stablecoins being a notable example). Discussions about stablecoins remain focused on the failure of Terra or debates about why stablecoins are not viable, consistently revolving around issuance issues rather than practical applications. However, stablecoins have demonstrated various application scenarios globally, and efforts should focus not only on issuance but also on developing products that integrate them into daily life. Achieving this goal requires policy support and a clear regulatory environment.

Since the blockchain industry (especially stablecoins) is still in its early stages, it is difficult to list specific successful cases to prove the rationale for its applications. However, precisely because of this, it is crucial to maintain an open attitude—essentially saying, 'Let’s take a serious look and try to understand it.' Only by starting to understand it now can we keep pace with the rapidly changing environment.

4. The puzzle is gradually coming together, and the future is beginning to take shape

The boundaries between finance and blockchain are beginning to blur, and leading companies on both sides are starting to collaborate. A typical example is the collaboration announced between JPMorgan Chase, the largest bank in the U.S., and the cryptocurrency exchange Coinbase. JPMorgan Chase will allow its credit card customers to convert reward points into USDC on Coinbase's Base blockchain and directly connect customer accounts to the Coinbase platform, enabling seamless, near-instant conversion between fiat and cryptocurrency. This is a milestone integration between traditional banks and cryptocurrency exchanges, indicating that major financial institutions now regard digital assets as a legitimate component of their financial services.

This trend is not limited to banks and exchanges. Coinbase is also partnering with Morpho to expand the on-chain financial sector, specifically decentralized finance (DeFi). Through this collaboration, users can deposit their held Bitcoin via the Coinbase app and use it as collateral to borrow USDC for everyday expenses. This demonstrates a strategy for asset utilization that traditional finance cannot achieve. In fact, investors can continue to hold Bitcoin while managing their daily cash flow, indicating that blockchain-based financial innovation has entered a practical stage.

New developments are also emerging in the fintech sector. The popular trading platform Robinhood is launching its own Layer-2 blockchain to provide infrastructure for the on-chain issuance and trading of listed and private stocks. Robinhood Chain will eventually connect to the Ethereum ecosystem. This means that fintech platforms can not only provide brokerage services but also utilize their own blockchain to handle a broader range of on-chain financial assets. In short, a new trend is forming: traditional fintech platforms are adopting blockchain technology to achieve asset ownership and liquidity that were previously unattainable.

Unfortunately, compared to these global financial innovation cases, South Korea is still lagging behind. There have not yet been substantial collaborations or integration initiatives between banks, exchanges, fintech startups, and DeFi projects in South Korea. Perhaps South Korean institutions need to at least try using private blockchain platforms (such as JPMorgan's private Kinexis network) to accumulate practical experience. Major countries and financial institutions around the world have already begun to outline blockchain-driven financial blueprints and actively engage in collaboration. If South Korea continues to stagnate, domestic discussions will inevitably remain at the theoretical level and fail to be put into practice.

Of course, implementing blockchain is not easy, and it is understandable to proceed cautiously while its market impact remains unclear. However, avoiding issues or indefinitely delaying action due to uncertainty is not the best choice. The transformation of the financial system driven by blockchain has already begun, and pioneers are rapidly learning and advancing. The remaining question is when and how others will choose to join this wave.

The momentum for change is becoming increasingly evident. As the pieces of the puzzle come together, now is a crucial moment to deeply understand the blockchain industry—and the best time to seriously consider and take action to adopt blockchain technology.