President Donald Trump campaigned on a pro-cryptocurrency platform, and his second administration’s early phase followed through on plans to bolster the industry — at least as much as he could by executive actions, without input from Congress.
While Trump once called bitcoin a “scam,” he did an about-face last year in his successful bid for a second, nonconsecutive term. Trump vowed in 2024 to protect digital assets such as the flagship cryptocurrency. The industry poured tens of millions of dollars into the election (48% of all corporate money in the election cycle came from the crypto industry.) It is now seeing a return on that investment.
Many of the executive actions related to bitcoin and crypto were wish-list items that the industry has been pushing for and are a course correction from former President Joe Biden’s administration. The one-term Democratic president and administrative agencies under his direction were often seen as adversarial to crypto.
Since the election, the prices of bitcoin and many other digital assets have risen in response to perceptions of a regulatory sea change. For instance, the price of bitcoin has been bouncing around $100,000 — it was about $68,000 right before the election.
Crypto working group and task force
The crypto world has long been pushing for further regulatory clarity and rules of the road for the industry. Since Trump entered office, one of the most important actions his administration has taken is announcing a crypto working group designed to recommend a regulatory framework.
The President’s Working Group on Digital Asset Markets will be chaired by venture capitalist David Sacks, Trump’s artificial intelligence and crypto czar. Membership of the working group will include officials from agencies such as the Treasury Department, the Justice Department, the Securities and Exchange Commission, and more.
Within 180 days of the working group’s formation, the group must submit a report to Trump recommending regulations and legislative plans to further the policy proposals in the executive order.
“The whole point of this group is to explore federal regulations for stablecoins, to define the overall market structure — essentially, what’s a security? What’s a commodity? What’s a digital asset? [And] provide regulations around these,” Utkarsh Ahuja, founder and CEO of Moon Pursuit Capital, told the Washington Examiner.
The Trump administration SEC is also making moves.
Acting SEC Chairman Mark Uyeda announced the formation of a crypto task force “dedicated to developing a comprehensive and clear regulatory framework” for the crypto industry. SEC Commissioner Hester Peirce, who is known by her nickname of “Crypto Mom,” is being put in charge of the task force, a welcome sign for crypto advocates.
Brian Morgenstern, who is head of public policy at Riot Platforms, told the Washington Examiner that Trump’s executive action “marks a sea change from the Biden administration, which tried to put all of our companies out of business for four years.”
Revocation of SAB 121
The Trump administration also revoked a Biden administration-era accounting policy rule related to cryptocurrency, one that was very unpopular and even drew bipartisan opposition on Capitol Hill.
The provision in question was an accounting policy known as the Staff Accounting Bulletin 121, or SAB 121.
That measure was intended to inform businesses about how to account for their cryptocurrency assets and said they should keep their assets on their balance sheets. Opponents have argued that such a policy discourages companies and major custodians from holding crypto assets for customers.
“SAB 121 got a lot of attention over the course of the past couple of years, first because it decreased the ability of a lot of institutions that are in the custodial space to custody crypto assets,” Jennifer Schulp, director of financial regulation studies at the Cato Institute, told the Washington Examiner.
SAB 121 was sent back to Biden’s desk for review because some Democrats joined with Republicans in trying to get it canceled. The Senate voted 60-38 for a Congressional Review Act resolution nixing the measure, and 21 Democrats in the House joined Republicans. But Biden ended up vetoing the joint resolution.
Banning CBDC development
Another move the Trump administration took was to prohibit the development of a central bank digital currency, or CBDC. Privacy advocates and Republicans have expressed concerns about government espionage through CBDCs and have vigorously opposed the concept.
A CBDC is a form of digital currency issued by a central bank — in the case of the United States, that would be the Federal Reserve. With a CBDC, consumers would be able to use the digital currency issued directly by the Fed in addition to physical money such as cash.
Theoretically, a CBDC allows users to transfer money easily between digital wallets and buy goods and products all using the same node, which is the central bank. While that may sound similar to regular cryptocurrencies, the difference is that a CBDC would be issued directly through one government entity rather than maintained on a decentralized public ledger, as bitcoin is.
Now, Trump’s executive order prohibits any U.S. agencies from taking any action to “establish, issue, or promote” CBDCs within the U.S. or abroad.
“The EO is great because it draws a line in the sand against CBDCs, and that is critically important,” Morgenstern said.
Crypto reserve?
While on the campaign trail, Trump mentioned the idea of a sort of bitcoin reserve composed of digital assets that were seized by the government.
His latest executive action stops short of creating such a reserve but does direct the working group to “evaluate the potential creation and maintenance of a national digital asset stockpile” and propose criteria for establishing such a reserve that is “potentially derived from cryptocurrencies” seized by the government through law enforcement.
Proponents say such a reserve could function as a hedge against inflation and prevent further devaluation of the dollar while maintaining global dominance in financial innovation. Critics, though, say it is a solution in search of a problem and risky, given the volatility and uncertainty surrounding the relatively new asset class.
Morgenstern said the industry is eager to provide input to the working group.
“It should be a bitcoin strategic reserve, and we’re glad to see that there will be a process where we can make that clear, that they’re going to study it,” he said.
Sen. Cynthia Lummis (R-WY) told the Washington Examiner last month that she is planning to refile legislation that would create a bitcoin reserve. She previously filed the BITCOIN Act, legislation that would form a strategic bitcoin reserve, but it did not attract co-sponsors.
Friendlier touch
And just overall, the flurry of executive actions regarding the bitcoin and crypto space shows that Trump 2.0 will offer a friendlier touch to the industry.
Schulp said it is now “official administration policy to be friendlier” to the crypto industry, something that has been welcomed by the industry after four years under Biden.
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There is also hope among those in the crypto industry that with a friendlier administration, fewer crypto businesses will move out of the U.S.
“We’re pleased that the government, instead of attacking us, is asking us the right questions about what the rules of the road should be, how these businesses can thrive in the United States,” Morgenstern said.