To "protect the US Financial System" as well as the "US digital assets ecosystem," the White House now recommends to "add a sixth special measure to Section 311 authorizing FinCEN to prohibit, or impose conditions upon, certain transmittals of funds. [...] This would enable Treasury to target foreign digital asset exchanges or digital asset transactions involving criminal or state actors—without regard to the nature of their illicit activity."

The White House states that "control" should be a defining factor for whether digital assets service providers qualify as money transmitters and therefore fall under Bank Secrecy Act (BSA) obligations, but at the same time states that FinCEN's 2019 guidance is not sufficient and should potentially be rescinded. Instead, it recommends that Congress should define asset-specific sub-types to be amended to the BSA, and that the Treasury, at the direction of Congress, should consider "specified [BSA] obligations to actors in the DeFi ecosystem based on the role that they play and the attendant risks."

Specifically, the White House tasks legislators to "consider specifying actors within the decentralized finance ecosystem that should have AML/CFT obligations, taking into consideration those actors’ roles in the ecosystem and attendant risks."

"These tools [digital identities] could potentially be used by regulated digital asset intermediaries to support onboarding or by a DeFi services’ smart contracts to automatically check for a credential before executing a user’s transaction," the White House states. "These tools could also potentially incorporate a user’s transaction history on the public blockchain into their identity profile, providing additional information to digital asset intermediaries and other counterparties on a user’s behavior and exposure to illicit finance risks."

While the White House notes that some of these tools leverage ZeroKnowledge Proofs to "to confirm that their identity has been verified or subject to screening by a third party without revealing underlying personal information," it also states that "access to underlying personal information could be allowed at the user’s request or with their permission."