The Biden administration just rolled out recommendations for regulating crypto that signals potential for a digital dollar and tighter penalties to crack down on crime

• The Biden administration published preliminary guidance on regulating cryptocurrencies.
• The report follows Biden's executive order in March calling for an examination of digital assets.

The White House released Friday a comprehensive framework that puts forth recommendations for regulating cryptocurrencies after a six-month examination of digital assets.

The report follows a March executive order from President Biden that asked federal agencies to further research cryptos.

The Biden administration's new framework calls for further private innovation in the digital asset space while asking both the Securities and Exchange Commission and Commodity Future Trading Commission to crack down further on thefts and crimes throughout the industry.

It also comes after the crypto crash in May erased $600 billion from crypto investments, while the sector is still under pressure from the Federal Reserve's interest rate hikes and persistent inflation.

The report also touched on the Federal Reserve's project for a central bank digital currency, which the White House says "has the potential to offer significant benefits." The report cautions that a CBDC still carries immense consequences that include "runs to CBDC in times of stress."

Meanwhile, the White House signaled Congress may need to get involved in tightening penalties to crack down on illicit activities.

"The President will evaluate whether to call upon Congress to amend the Bank Secrecy Act, anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers — including digital asset exchanges and nonfungible token (NFT) platforms," a White House fact sheet said.

The administration is also weighing asking Congress to stiffen penalties for unlicensed money transmitting and amending statutes to ease the Justice Department's ability to prosecute digital asset crimes.