In his first week in office, President Donald Trump hit the ground running on his mission to make the U.S. the “crypto capital of the planet” by signing an executive order that calls for looser regulations in the cryptocurrency sector.
What Is Trump’s Executive on Crypto?
Titled “Strengthening American Leadership in Digital Financial Technology,” Trump’s executive order charges a working group with developing a regulatory framework that brings clarity to the crypto industry. It also encourages the development of stablecoins, ensures access to banking services and prohibits the creation of a central bank digital currency. The working group will also evaluate the creation of a national digital asset stockpile.
In an accompanying fact sheet, the Trump administration said it will put an end to “aggressive enforcement actions and regulatory overreach that have stifled crypto innovation.” The crypto industry has had a contentious relationship with the Securities and Exchange Commission, in particular, which sued companies that didn’t register with the SEC or comply with existing financial regulations.
Crypto advocates rallied behind Trump during his presidential campaign after he pledged to fire former SEC Chair Gary Gensler, who resigned before Trump took office. After promising that crypto regulations would be written by people who “love” the industry, Trump has nominated several crypto-friendly cabinet officials, including former SEC Commissioner Paul Atkins, who will develop the pro-crypto policies outlined in his executive order.
What Is Trump’s Executive Order on Digital Financial Technology?
Trump’s executive order, titled “Strengthening American Leadership in Digital Financial Technology,” tasks federal agencies with recommending cryptocurrency regulations that “promote United States leadership in digital assets and financial technology while protecting economic liberty.”
The order asks agencies to recommend regulatory or policy changes to a new crypto working group within two months. Within six months, the working group will recommend regulatory and legislative proposals for Trump to consider.
Trump’s executive order gives direction for the creation of crypto-friendly policies, but some of the recommendations proposed by the working group may require congressional approval. Executive orders in general can be overturned by a judge if they are deemed unconstitutional. And a future presidential administration can overturn the order if it is not backed by additional legislation, which would require congressional action to change.
What Is Included in the Crypto Executive Order?
The executive order tasks a working group with developing a regulatory framework for digital assets. The working group will be chaired by David Sacks, the White House’s crypto advisor, and will include several other cabinet officials, including the attorney general, the SEC chairman and the secretaries of the treasury, commerce and homeland security departments. The working group will accept policy recommendations from federal agencies, and then recommend its regulatory and legislative proposals to Trump.
The working group is specifically tasked with evaluating the creation of a national stockpile of digital assets seized by law enforcement — an idea Trump floated during his presidential campaign that was previously proposed by Cynthia Lummis, a Republican senator from Wyoming. Some in the cryptocurrency community had hoped the Trump administration would purchase Bitcoin and make it a reserve asset class, so they were disappointed that the executive order did not specifically mention Bitcoin or purchasing additional assets beyond those seized by law enforcement.
Additionally, the executive order also lays out five broad policy goals:
1. Protect Against Legal Persecution
The order affirms that individual citizens and private-sector entities should be able to use blockchain technology, develop blockchain software and mine cryptocurrency without “persecution.” The order also establishes protections for crypto investors who hold their assets in personal digital wallets instead of using exchange platforms, which have to report data to the Internal Revenue Service.
2. Promote the Development of Stablecoins
Trump said in 2021 that crypto could pose a threat to the U.S. dollar, but he has since embraced a more optimistic view of cryptocurrency. Still, the executive order states that the government can protect the sovereignty of the U.S. dollar by promoting the development of dollar-backed stablecoins. In general, stablecoins are less volatile than other crypto assets because their value is linked to a currency, commodity or algorithm.
3. Ensure Access to Banking Services
The executive order also ensures “fair and open access” to law-abiding citizens and entities in the crypto space. In 2022, the SEC introduced Staff Accounting Bulletin No. 121 (SAB 121), a rule that required banks and financial institutions to record their crypto holdings as a liability on their balance sheet. The measure, which prevented banks from holding crypto assets, was rescinded in the first week of the Trump administration.
4. Provide Regulatory Clarity
The crypto industry has long claimed that it lacks clear regulatory guidelines, and that the SEC has instead punished crypto companies by enforcing existing laws. Under Gensler, the SEC filed 125 lawsuits against crypto companies, including high-profile cases targeting companies that didn’t register with the SEC. Many crypto companies argued they don’t need to register because crypto assets are securities. The few companies that tried to register hit a dead-end in negotiations with the agency.
Trump’s executive order promises federal agencies will provide “regulatory clarity and certainty built on technology-neutral regulations, frameworks that account for emerging technologies, transparent decision making, and well-defined jurisdictional regulatory boundaries.”
5. Prohibit the Creation of a Central Bank Digital Currency
The original idea behind cryptocurrency was to enable payments outside of the traditional banking system, using currency that could not be manipulated by a central bank or government. So the idea of a central bank digital currency (CBDC) — a government-issued digital currency that is controlled by a central bank — is anathema to the crypto industry. Trump’s executive order expressly prohibits the creation of a CBDC, arguing that it would “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States.”
Why Was Biden’s Executive Order on Crypto Revoked?
Trump’s executive order also revoked former President Joe Biden’s executive order on crypto, arguing that it “suppressed innovation and undermined U.S. economic liberty and global leadership in digital finance.” While Trump’s order focuses on deregulation and economic liberty, Biden’s was more focused on regulations and safeguards.
Issued in March 2022, Biden’s “Ensuring Responsible Development of Digital Assets” executive order outlined six broad policy priorities:
- Protect consumers, investors and businesses.
- Promote financial stability and mitigate systemic risk.
- Mitigate illicit finance and national security risks.
- Reinforce U.S. leadership in the global financial system.
- Promote access to safe, affordable financial services.
- Ensure technology is developed and used responsibly.
Biden’s order also directed agencies to evaluate the creation of a potential U.S. CBDC — particularly one that would be interoperable with other CBDCs, which could facilitate faster and lower-cost cross-border transactions. The Federal Reserve has researched the pros and cons of a potential CBDC, but it has not endorsed its creation.
Trump’s executive order also rescinded the Biden administration’s “Framework for International Engagement on Digital Assets” for the same reasons as his executive order. This framework, issued by the Treasury Department in response to Biden’s order, outlined how the U.S. would engage with international partners like the G7 and the International Monetary Fund to shape global digital asset policies.
What Else Is the Trump Administration Working on With Crypto?
In addition to nominating Atkins as SEC chairman, Trump has tapped several other crypto boosters for key cabinet positions. Scott Bessent, Trump’s pick for treasury secretary, has been confirmed by the Senate. Meanwhile, Atkins, as well as Secretary of Commerce nominee Howard Lutnick, have not yet been confirmed as of January 30.
Under the leadership of Acting Chairman Mark Uyeda, the SEC has already established a crypto task force to develop regulations aligned with Trump’s executive order. The commission will be led by Hester Peirce, who has been nicknamed “Crypto Mom” due to her advocacy for crypto innovation.
“To date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way,” the SEC said in a statement. “Clarity regarding who must register, and practical solutions for those seeking to register, have been elusive. The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud. The SEC can do better.”
The SEC has also made quick work of rescinding Staff Accounting Bulletin No. 121, which has been extremely unpopular in the crypto industry. The rule, which requires banks to record their crypto holdings as a liability on their balance sheets, making it economically prohibitive for banks to have custody of crypto assets.
Frequently Asked Questions
What is Trump's executive order on crypto?
Trump’s executive order on crypto tasks a working group with providing crypto industry regulations that “promote United States leadership in digital assets and financial technology while protecting economic liberty.” Specifically, it promises regulatory clarity, access to banks and the potential creation of a national digital asset stockpile. It also prohibits the creation of a central bank digital currency, which was proposed by the Biden administration.
