The White House released its first-ever comprehensive framework for responsible regulation of digital assets per the president’s executive order on digital assets. The framework outlines six key priorities: consumer and investor protection; promoting financial stability; countering illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. The reports call for the SEC and CFTC to go after crypto scams, fraud, and other illegal activity and outline the potential development of a CBDC. More reports will be released by Treasury as part of this framework, including one on financial stability risks due next month, one on DeFi due in February, and one on NFTs due in July.

The Department of Justice published a new report on cryptocurrency crime in which it recommended a variety of legal reforms and created a network, the Digital Asset Coordinator Network (DAC), comprised of experts to advise federal offices. This network was formed under the leadership of the National Cryptocurrency Enforcement Team and held its first meeting on September 8. The report was published in response to President Biden’s digital asset executive order and gives particular attention to NFTs and DeFi.

The SEC is claiming in Illinois federal court that a Chicago crypto investment advising firm, Chicago Crypto Capital LLC, illegally raised $1.5 million in an unregistered offering through which it sold tokens of the asset BXY at a significant markup to at least 100 individuals, most of whom were inexperienced investors.

The New York State Bar Association announced on September 12 that it is launching a task force to make recommendations on how virtual currencies and digital assets should be regulated within New York, while also studying how the technologies can help the state's legal community. The group is called the Task Force on Emerging Digital Finance and Currency and will be led by a partner at Drohan Lee LLP and the co-chair of Perkins Coie LLP's fintech industry group. Its member also include representatives from the financial sector and academia, cryptocurrency and blockchain experts, and other attorneys.

Sen. Cynthia Lummis (R-WY) wrote an opinion piece published by Coin Telegraph in which she argues that digital assets are the best way to ensure that the United States remains a fiscal world leader. She writes, “Decentralized digital assets…offer users a way to invest in a store of value that governments cannot inflate away. The ledger technology undergirding it, called blockchain, has many incredible applications, from currency to tracking shipping and enabling smart contracts,” and notes that in order for this goal to be achieved, Congress must give authority to federal agencies like the SEC and CFTC and create a clear, common set of definitions for regulation of digital assets.

In an Axios interview, Rep. Tom Emmer (R-MN) said that cryptocurrency “cannot be partisan… This is literally about looking at America and opportunities for Americans [...] If you try to take all risk out of this stuff, well, you're going to take away a lot of the opportunity [...] It can either happen here in this country or it will happen somewhere else.”

The FDIC has issued cease and desist letters to five companies including FTX US for making cryptocurrency-related false or misleading representations about deposit insurance. The FDIC has said, “Based upon evidence collected by the FDIC, each of these companies made false representations—including on their websites and social media accounts—stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured.”

Senate Banking Committee Ranking Member Pat Toomey (R-PA) sent a letter to FDIC Director and Acting Chairman Martin Gruenberg on August 16 saying that he is investigating claims that the FDIC has blocked banks from doing business with crypto businesses. The letter says, “Personnel in the FDIC’s Washington, D.C., headquarters are urging FDIC regional offices to send letters to multiple banks requesting that they refrain from expanding relationships with crypto-related companies, without providing any legal basis for sending such letters.”

The Federal Reserve issued a supervisory letter directing banks to notify regulators before engaging in any new activity involving cryptocurrency startups or digital asset markets. It states, “Banking organizations engaging in crypto-asset-related activities face potential legal and consumer compliance risks,” and adds that, “if any supervised banking organization has questions regarding the permissibility of any crypto-asset-related activities or about the applicability of any filing requirements, it should consult its lead supervisory point of contact at the Federal Reserve.”