President Trump has officially signed the executive order “Strengthening America’s Leadership in Digital Financial Technology”. This move not only demonstrates the US government’s growing attention to the digital asset industry, but also sets a clear regulatory framework for the future development of the digital asset industry. So, what is the focus of this executive order? What impact may it bring?
TL;DR:
1. Protection of Crypto Rights (Development, Deployment of Software, Self-Custody, Trading, Mining);
2. Ban on CBDC (Central Bank Digital Currencies);
3. Protection of Dollar Sovereignty (Support for USD-backed stablecoins);
4. A new regulatory framework will be introduced within 180 days to regulate the issuance and operation of digital assets, including the possibility of establishing a national digital asset reserve (from cryptocurrencies seized by the government);
5. 30-day review of existing regulations impacting digital assets, and within 60 days, proposals on whether to repeal or modify any existing guidelines.
Core Aspects of the Executive Order
Supporting Innovation and Responsible Development
The Executive Order clarifies that the current administration’s policy is to support responsible development and use of digital assets, blockchain technologies, and related innovations across all sectors. Key areas of focus include:
1. Protection of Legal Access: Ensuring individuals and private entities can access and use open public blockchain networks, develop and deploy software, engage in mining, validate transactions, trade without censorship, and self-custody digital assets.
2. Promote Dollar Sovereignty: Actions to promote the development and growth of legal USD-backed stablecoins globally.
3. Financial Inclusion: Ensuring all citizens and businesses have fair and open access to banking services.
4. Regulatory Clarity: Providing clear, technology-neutral regulations to support a vibrant digital economy while ensuring transparency in decision-making and defining regulatory boundaries.
5. Ban on CBDCs: The order includes measures to protect Americans from the potential risks of CBDCs, banning their establishment, issuance, and use within the U.S. to prevent threats to financial system stability, individual privacy, and U.S. sovereignty.
Revoking Previous Policies & Establishing New Frameworks
1. Revocation of Executive Order 14067 (issued on March 9, 2022, “Ensuring Responsible Development of Digital Assets”).
2. Immediate revocation of the U.S. Treasury’s “Digital Assets International Participation Framework” (July 7, 2022).
3. Securities and Exchange Commission (SEC) has also officially rescinded SAB-121, an accounting standard that required companies to report cryptocurrency holdings on their balance sheets, potentially impacting their ability to offer crypto custody services.
Senator Cynthia Lummis praised the rescinding of SAB-121, which she believes returns the SEC to its proper role. MicroStrategy’s Michael Saylor further supported the decision, suggesting it would allow banks to offer Bitcoin custody services more freely.
Establishment of the President’s Digital Asset Market Working Group
To coordinate action across departments, the Executive Order establishes a Digital Asset Market Working Group. The group, chaired by David Sacks, includes leaders from the Treasury Department, Department of Justice, Department of Commerce, and others.
The working group’s legislative proposals include:
1. Federal Regulatory Framework: By 180 days, the group will submit recommendations for a regulatory framework that governs the issuance and operation of digital assets (including stablecoins), considering market structure, oversight, consumer protection, and risk management.
2. Evaluation of National Digital Asset Reserve: The group will also assess the feasibility of establishing and maintaining a national digital asset reserve, potentially made up of cryptocurrencies lawfully seized by the federal government through law enforcement actions.
3. Public Hearings: The group will hold public hearings, engaging experts in the digital asset and market sectors, to ensure transparent decision-making.
Ban on Central Bank Digital Currency (CBDC)
The Executive Order explicitly prohibits federal agencies from taking actions to establish or promote CBDCs (unless mandated by law). Any ongoing initiatives related to CBDC creation within the U.S. should immediately cease, effectively ending plans for U.S. CBDC development.
Potential Impacts
The Executive Order’s clear regulatory framework and the U.S. government’s support could create a more stable environment for the digital asset industry, attracting more capital and talent. Increased transparency and stricter regulation may also help build investor confidence in the sector.
Furthermore, the push for USD-backed stablecoins (instead of CBDCs) is expected to strengthen the U.S. dollar’s dominance in the global financial system, enhancing America’s economic influence. Stablecoins may enter a new era, serving as a vital bridge between traditional finance and digital finance.
A notable point is the exclusion of the Federal Reserve (Fed) and the Federal Deposit Insurance Corporation (FDIC) from the Digital Asset Market Working Group. The FDIC, which ensures bank deposits, might have weakened the working group’s ability to protect consumers and ensure financial stability. This absence could lead to a fragmented regulatory framework.
The idea of establishing a National Digital Asset Reserve—composed of cryptocurrencies seized by the government—raises questions about whether the U.S. might eventually purchase cryptocurrency from open markets for this purpose.
A New Era for Digital Assets?
As Michael Saylor states, this Executive Order marks the official beginning of the “Crypto Renaissance” in the U.S. The action not only provides a clear policy direction and legal support for digital assets but also injects new energy and momentum into the global digital finance market. The regulatory shift in the U.S. may spur other nations to follow suit, potentially leading to greater coordination and cooperation on global digital asset regulation.
This Executive Order could ultimately redefine how digital assets are integrated into the broader financial system, making the U.S. a leader in the future of digital finance.
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