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Explained: Trump’s executive order to support the growth of cryptocurrency

by admin January 24, 2025
January 24, 2025
Explained: Trump’s executive order to support the growth of cryptocurrency

On Thursday, President Donald Trump signed an executive action that addresses key promises he made to the cryptocurrency industry during his 2024 campaign.

“The digital asset industry plays a crucial role in innovation and economic development in the United States, as well as our nation’s international leadership,” the order said.

“It is therefore the policy of my administration to support the responsible growth and use of digital assets.”

Here’s a breakdown of what the order does and doesn’t do, and its implications for the crypto world.

Creation of a presidential working group on digital assets

The executive order establishes a task force to coordinate the development of clear regulations for the digital asset industry.

This group, chaired by White House AI and crypto czar David Sacks, will include high-ranking officials like the Treasury Secretary and the SEC Chair.

Key tasks for the group include identifying all existing regulations and policies affecting crypto within 30 days as well as submitting recommendations on these policies within 60 days.

The task force will also be required to deliver a comprehensive report with legislative and regulatory proposals within 180 days.

Anchorage Digital CEO Nathan McCauley praised the move, stating it marks a “significant first step” toward consistent and transparent regulation.

Evaluation of a national digital asset stockpile

While Trump stopped short of authorizing the immediate creation of a “strategic national bitcoin stockpile,” the order directs the working group to assess its feasibility.

This evaluation includes exploring the potential use of cryptocurrencies lawfully seized by the federal government as well as proposing criteria for managing and expanding such a reserve.

The scope of this proposed stockpile could extend beyond Bitcoin, encompassing other digital assets seized through law enforcement actions.

Prohibition of Central Bank Digital Currencies (CBDCs)

Trump delivered on his campaign promise to outlaw the creation of CBDCs, which are government-controlled cryptocurrencies.

As per the order, CBDC has been defined as “a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank.”

According to Trump’s order, agencies are prohibited from undertaking any action to establish, issue, or promote CBDCs within the jurisdiction of the United States or abroad.

They can only do so if they are required by law.

“Except to the extent required by law, any ongoing plans or initiatives at any agency related to the creation of a CBDC within the jurisdiction of the United States shall be immediately terminated, and no further actions may be taken to develop or implement such plans or initiatives,” read the order. 

While this prohibition resonates with crypto enthusiasts wary of state oversight, critics, like crypto researcher Molly White, argue it is largely symbolic, as no federal agency had seriously pursued a CBDC initiative.

Rescinding Biden’s 2022 crypto Executive Order

Trump revoked an earlier directive from President Joe Biden, which focused on studying digital assets and addressing their potential risks.

This signals a departure from Biden’s cautious approach to crypto and a move toward more industry-friendly policies.

Crypto industry reactions

Bitcoin (BTC) experienced volatility following the announcement, initially rising and then falling, before settling slightly higher over a 24-hour period.

The mixed market response reflects uncertainty about the order’s immediate impact.

Sean Farrell, head of digital assets at Fundstrat, remarked in a Yahoo Finance report that the action had been “priced in” by the market.

However, he noted that Trump’s pro-crypto stance is “huge” for the long-term future of the industry.

Other developments already underway reflect the administration’s influence.

For instance, the Securities and Exchange Commission (SEC) recently rescinded accounting guidance (SAB 121), which had hindered banks and broker-dealers from offering crypto custody services.

The post Explained: Trump’s executive order to support the growth of cryptocurrency appeared first on Invezz

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