The global digital assets market has experienced remarkable growth, reaching a market capitalization of $3 trillion in November 2021, with 16% of American adults participating in digital assets. This expansion presents both opportunities and risks, as evidenced by the recent instability in crypto markets. In response, the U.S. government has initiated a comprehensive approach to address the challenges and harness the potential benefits of digital assets.

President Biden's Executive Order on Ensuring Responsible Development of Digital Assets, signed on March 9, 2022, outlined a whole-of-government strategy to tackle the risks and opportunities of digital assets. Over the past six months, government agencies have collaborated to develop frameworks and policy recommendations that align with the Executive Order's six key priorities. These priorities encompass 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 nine reports submitted to the President, consistent with the Executive Order's deadlines, reflect diverse stakeholder input from government, industry, academia and civil society. These reports articulate a clear framework for responsible digital asset development, paving the way for further action both domestically and internationally. They advocate for measures to promote innovation, such as kickstarting private-sector research and development and supporting cutting-edge U.S. firms in global markets. Concurrently, they call for mitigating the downside risks through increased enforcement of existing laws and the establishment of efficiency standards for cryptocurrency mining.

Digital assets pose significant risks for consumers, investors and businesses due to their highly volatile nature. The current global market capitalization of cryptocurrencies stands at approximately one-third of its November 2021 peak. Despite this, sellers frequently mislead consumers about digital assets' features and expected returns, and non-compliance with applicable laws and regulations remains widespread. Outright fraud, scams and theft in digital asset markets are escalating, with reported monetary losses from digital asset scams surging 600% higher in 2021 than the previous year.

Since taking office, the Biden-Harris Administration and independent regulators have been working to safeguard consumers and ensure fair play in digital assets markets. This has been achieved through issuing guidance, increasing enforcement resources and aggressively pursuing fraudulent actors. The reports released outline plans for additional measures, including encouraging regulators like the Securities and Exchange Commission and Commodity Futures Trading Commission to pursue investigations and enforcement actions against unlawful practices in the digital assets space. Furthermore, the reports recommend that the Consumer Financial Protection Bureau and Federal Trade Commission redouble their efforts to monitor consumer complaints and enforce against unfair, deceptive or abusive practices. Agencies are also urged to collaborate, address acute digital assets risks and share data on consumer complaints to maximize effectiveness. The Financial Literacy Education Commission will spearhead public-awareness efforts to educate consumers about the risks involved with digital assets, identify common fraudulent practices and learn how to report misconduct.