Contending that the digital asset industry plays a crucial role in innovation and economic development in the US and its leadership internationally, the Trump administration has established a timeline for updating rules across various government departments to foster the development of the industry.
These initiatives signal a new approach for the US payments and banking systems – one that integrates blockchain, cryptocurrencies and stablecoins and brings them into the broader payments and financial services ecosystems.
And it shows the White House and US agencies are coming out swinging, as they seek a more practical regulatory framework for the cryptocurrency industry.
Trump’s move
President Donald Trump’s executive order on cryptocurrency seeks to make the US “the crypto capital of the planet.”
Trump passed the order last Thursday night, and it calls for the creation of a cryptocurrency working group to propose new digital asset regulations and to look into the creation of a national cryptocurrency stockpile, possibly from cryptocurrencies seized by the federal government through law enforcement efforts.
This could end up making cryptocurrency like bitcoin and ether more mainstream and possibly set it up to be used for payment, just like credit and debit cards.
“This means that cryptocurrency and digital assets are being given legitimacy by our federal government,” said Amy Lynch, a former regulator with the SEC and founder and president of financial consulting firm FrontLine Compliance.
CBDC no more
The order terminates plans to create a central bank digital currency (CBDC). During the Biden administration, the Federal Reserve was studying the possibilities of creating a central bank digital currency, and many nations are considering the potential benefits of cheaper and faster cross-border payments.
The Trump order points to the possibility of a CBDC as a negative, saying it might “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States.”
Essentially, the order establishes a Digital Asset Markets working group whose membership includes the US Treasury secretary (nominee Scott Bessent awaits a full chamber vote on his nomination), White House AI and Crypto Czar David Sacks, and the Chair of the SEC (Trump has nominated Paul Atkins), along with “the heads of other relevant departments and agencies.”
Within 180 days of the order, the working group should recommend regulatory and legislative proposals for the digital asset industry.
The order also terminates any ongoing plans to create a central bank digital currency, meaning issuing dollars using a blockchain or similar technology.
House crypto subcommittee
Representative Bryan Steil (R-Wisc) has been appointed the chair of the House subcommittee focused on cryptocurrency, saying he intends to update financial rules with blockchain technology in mind.
“I’ve been focused out of the gates on what I think are possibly the two most important pieces which I think are market structure [which assets should be regulated by the CFTC versus the SEC] and stablecoin legislation,” Steil told Axios.
He said he will judge measures by a simple two-point framework – preventing fraud and making sure the industry remains in the US.
“What we don’t want to do is put our heads in the sand and pretend as if this innovation and development is not going to occur anywhere.”
SEC opens gates
As of late last week, the SEC has officially rescinded Staff Accounting Bulletin (SAB) No. 121, a controversial rule that had long hindered banks from offering bitcoin and crypto custody services. This is a significant shift in the SEC’s approach to regulating bitcoin and crypto and paves the way for greater financial integration.
Introduced in March 2022, SAB 121 required institutions holding bitcoin and crypto assets for customers to record those holdings as liabilities on their balance sheets.
Banks and custodians contended that the requirement created significant operational and financial burdens for banks and custodians, effectively discouraging them from providing bitcoin-related services. And the rule was widely criticized by the crypto industry and lawmakers, with SEC Commissioner Hester Peirce calling it a “pernicious weed” in a statement in April 2023.
$TRUMP token
Trump-linked crypto ventures, including a meme coin known as $TRUMP and tokens issued by World Liberty Financial, have raised concerns among ethics experts and market participants about conflicts of interest.
The $TRUMP token was recently trading at around $33.76, according to CoinMarketCap, having lost about half its value since its peak around $75 Sunday. It had traded below $10 early on Sunday.
Two lawmakers, Senator Elizabeth Warren (D-MA) and Representative Jake Auchincloss (D-MA), asked US regulators to answer questions about the $TRUMP and $MELANIA cryptocurrencies launched by the president and his wife. They accused the president of using these tokens “to earn extraordinary profits off his Presidency.”
“$TRUMP and $MELANIA present grave risks to President Trump’s ability to impartially govern our nation – and to investors in these coins, who may be made victims of a rug-pull scheme orchestrated by the Trump family,” they said.
President Trump has pledged to hand management of his assets to his children.
Bad actors
Far from everyone is as excited about the many changes and fast pace of them in the crypto space, noting that the executive order could get rid of regulations that helped the industry dispense of many bad actors.
“Any crypto regulation should actually protect investors rather than defending the ability of cryptocurrency issuers to stuff the public with another useless digital currency,” said James Royal, Bankrate principal investment and wealth management reporter.
“Given the crypto industry’s sizable donations to the Trump campaign and the Trump family’s own personal stake in newly launched cryptocurrencies, I’m not optimistic that any regulation proposed here will do much more than pave the way for legalized scams.”
