Prior to Inauguration Day some questioned whether – and to what degree – the Trump Administration was serious about prioritizing crypto. Trump’s first week in office has made clear that addressing digital assets regulation is far more than merely a campaign talking point.
On January 23, 2025, the White House issued an executive order entitled “Strengthening American Leadership in Digital Financial Technology” (the “Executive Order”). The Executive Order reflects a pro-digital assets approach by the White House and, among other things, revokes former President Biden’s 2022 Executive Order 14067 (“EO 14067”), entitled “Ensuring Responsible Development of Digital Assets.”
Purpose of the Executive Order
According to the Executive Order, its purposes include promoting United States leadership in digital assets and financial technology while protecting economic liberty.
Key Provisions
The Executive Order:
- Encourages the lawful use of digital assets and blockchain technologies. Further, it aims to promote the development of dollar-backed stablecoins to ensure that the US dollar retains its sovereignty in the digital age.
- Explicitly calls for technology-neutral regulatory frameworks to facilitate a vibrant digital economy. Further, the Executive Order notes that transparency in decision making and well-defined regulatory boundaries are important in the efforts that will follow.
- Seeks to protect and promote fair and unrestricted access to banking services for all citizens and private businesses.
- Prohibits any federal agency from establishing, issuing, or promoting Central Bank Digital Currencies (“CBDCs”). CBDCs are 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.” The move to prohibit CBDCs is intended to protect individual privacy and prevent security concerns associated with CBDCs.
- In addition to revoking EO 14067, directs the Secretary of the Treasury to immediately revoke the Treasury Department’s July 7, 2022, guidance, entitled “Framework for International Engagement on Digital Assets” (“Prior Treasury Guidance”).
- Rescinds all policies, directives and guidance issued pursuant to EO 14067, and directs the Secretary of the Treasury to revoke all policies, directives and guidance issued pursuant to the Prior Treasury Guidance.
Institutional Framework
In addition to the key provisions noted above, the Executive Order establishes within the National Economic Council a working group on digital asset markets (the “Working Group”), which will be chaired by the Special Advisor for AI and Crypto. The Working Group will include key officials such as the Secretary of the Treasury, the Secretary of Commerce, the Chair of the Commodity Futures Trading Commission (“CFTC”) and the Chair of the Securities and Exchange Commission (“SEC”).
The Executive Order directs the Working Group to propose a Federal regulatory framework for the issuance and operation of digital assets, including stablecoins, giving consideration to provisions for market structure, oversight, consumer protection, and risk management. The Working Group also will evaluate the potential creation and maintenance of a national digital asset stockpile, potentially derived from digital assets seized in connection with the Federal government’s law enforcement efforts.
Implications and Takeaways
- Trump was serious about Crypto: As noted above, the timing of the Executive Order appears to signal that crypto is a Trump Administration priority. Indeed, in just his first few days as the 47th President, Trump has signaled a major shift in US government policy related to crypto and other digital assets. In addition, days prior to his inauguration, the world saw the launch of Trump Coin and Melania Coin, memecoins that appreciated rapidly before experiencing declines, yet still representing billions of dollars in market cap.
- For Stakeholders:
- For Financial Institutions: The Executive Order promotes “fair and open” access to banking services for all law-abiding citizens and private sector entities, a likely indication that the Trump Administration intends to push back against the debanking of certain categories of “high-risk” or politically disfavored clients. The Executive Order also encourages the adoption and improvement of innovative financial technologies, though it does not directly address certain Biden Administration supervisory restrictions on the ability of banks and other financial institutions to engage in digital assets activities.
- For Technology Developers: There is a significant push towards safeguarding space for developers to innovate without unnecessary barriers.
- For Global Business Relationships: Although the Executive Order focuses on national policies, its provisions will have an impact on international partnerships and collaborations, particularly in standard-setting and cross-border digital financial transactions.
- What’s missing? Many in the industry were hoping to see a push for Federal agencies to re-evaluate their approach to crypto enforcement, including existing dockets. This may be addressed in future executive orders, or by the SEC’s new Acting Director of the Division of Enforcement, but was not addressed expressly in the Executive Order.
- Beyond the Executive Order: Other Updates
- On January 23, 2025, the SEC issued Staff Accounting Bulletin 122, which expressly rescinded Staff Accounting Bulletin 121 (SAB 121). SAB 121 had required SEC reporting companies, including banks and other publicly traded entities, to treat digital assets held in custody as both assets and liabilities on their balance sheets. This move to repeal SAB 121 followed the resignation, shortly prior to Inauguration Day, of the SEC’s Chief Accountant, a role that typically is not a political appointment.
- On Trump’s very first full working day in office, he issued a full pardon to Ross Ulbricht, who had been sentenced to a double life sentence plus 40 years for his role in connection with Silk Road.
- In July 2024, at the Bitcoin 2024 conference in Nashville, Tennessee, Trump announced an intention to create a national Bitcoin reserve. The Executive Order’s direction to the Working Group to evaluate the creation of a crypto stockpile from seized digital assets follows Wyoming Senator Cynthia Lummis’ January 15, 2025, informational request to Ronald L. Davis, Director of the United States Marshals Service (“US Marshals”) concerning the US Marshals’ proposed liquidation of over 69,000 Bitcoins acquired by the US government in connection with Silk Road-related seizures.
- On January 23, 2025, Senator Lummis– was tapped as the first-ever Chair of the Senate Banking Committee’s new Subcommittee on Digital Assets. Senator Lummis previously proposed and co-sponsored prominent bipartisan digital asset legislation, including the Lummis-Gillibrand Responsible Financial Innovation Act, which focused on crypto market structure, and the Lummis-Gillibrand Payments Stablecoin Act, which focused on stablecoin regulation.
- On January 16, 2025, Senator Lummis reported that she had demanded, in the form of a letter to the Federal Deposit Insurance Corporation (“FDIC”) Chair, Marty Gruenberg, that the FDIC immediately halt destruction of materials related to the reported anti-digital assets initiative sometimes referred to as Operation Chokepoint 2.0. Lummis announced that she had taken such actions after her office was contacted by whistleblowers alleging that the FDIC was destroying materials concerning the FDIC’s digital asset-related activities and threatening retaliation against FDIC staff for speaking out. “The FDIC’s alleged efforts to destroy and conceal materials from the U.S. Senate related to Operation Chokepoint 2.0 is not only unacceptable, it is illegal,” said Lummis in a release, entitled, “Lummis Demands FDIC Immediately Halt Destruction of Operation Chokepoint 2.0 Materials.” “If it is uncovered that anyone within the FDIC has knowingly destroyed materials or sought to obstruct the oversight functions of the Senate, it will result in swift criminal referrals to the U.S. Department of Justice. The American people deserve transparency, and I will see to it that they get the answers they deserve.”
- Having previously named Paul Atkins as his pick to Chair the SEC, President Trump appointed existing SEC Commissioner Mark Uyeda as Acting SEC Chair pending Paul Atkins’ Congressional confirmation. Notably, during Gary Gensler’s term as SEC Chair, Uyeda, like fellow SEC Commissioner Hester Peirce, voiced numerous dissents to SEC crypto enforcement actions. Following Trump’s election victory, Uyeda shared publicly his view that the American people had spoken and that the era of crypto “regulation by enforcement” must end, particularly where no allegations of fraud or actual harm exist. On January 21, 2025, Acting Chair Uyeda announced the formation of a new SEC agency-wide crypto task force, to be led by Commissioner Peirce, “dedicated to developing a comprehensive and clear regulatory framework for crypto assets.”
- Trump named pro-crypto CFTC Commissioner Caroline Pham as Acting Chair of the CFTC. Among other things, Pham leads the Global Markets Advisory Committee (“GMAC”), a committee created in 1988, among other things, to advise the CFTC “on issues that affect the integrity and competitiveness of U.S. markets and U.S. firms engaged in global business, including the regulatory challenges of a global marketplace that reflects the increasing interconnectedness of markets and the multinational nature of business.” The GMAC’s Digital Asset Markets Subcommittee supports a variety of crypto-related workstreams. On November 21, 2024, the Digital Asset Market’s Subcommittee’s Utility Token workstream presented to the CFTC concerning a proposed definition of a “utility token” that would be a commodity and not a security and developing regulatory guidance for market participants. As one of Pham’s first actions as Acting CFTC Chair, she appointed her key advisor, Harry Jung, as Acting Chief of Staff of the CFTC and announced that Jung would lead the CFTC’s engagement on crypto, decentralized finance (commonly referred to as DeFi), and other digital assets, building on his related work as the Designated Federal Officer of the GMAC. In the past, such engagements had been led by the CFTC’s enforcement head, with Jung’s appointment marking a shift in the CFTC’s approach.
- Bitwise is expected to seek SEC approval to launch a Dogecoin ETF, following reports of its January 22, 2025, application with Delaware’s Division of Corporations to register a trust called the “Bitwise Dogecoin ETF.” This DOGE development comes as the new, Elon Musk-led Department of Government Efficiency (D.O.G.E.) takes shape. As a result of the recent SEC leadership changes, many believe that Dogecoin ETFs and other similar “memecoin ETFs” would have a materially higher likelihood of receiving SEC approval than when Gary Gensler was SEC Chair. Some also anticipate that, under the Trump administration, Ether spot ETFs may receive regulatory approval to feature staking.