On 23 January 2025, President Trump issued a highly anticipated executive order on digital assets titled ‘Strengthening American Leadership in Digital Financial Technology’ (the Order). The Order asserts that the digital asset industry is critical for US innovation, economic development, and international leadership. It further undertakes “..to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy …”
Highlights of the Order are outlined below.
The Order establishes the Presidential Working Group on Digital Asset Markets (the Working Group) within the National Economic Council “to strengthen US leadership in digital finance” and to “develop[] a Federal regulatory framework governing digital assets, including stablecoins, and evaluat[e] the creation of a strategic national digital assets stockpile.” (Fact Sheet)
The Working Group will be chaired by David Sacks, the special advisor for AI and Crypto. It will include the secretaries of the Treasury and Commerce, the attorney general, the chair of the Securities and Exchange Commission (SEC), the chair of the Commodity Futures Trading Commission (CFTC), and the heads of other relevant departments and agencies.
Within 30 days of the Order, the agencies constituting the Working Group must “identify all regulations, guidance documents, orders, or other items that affect the digital asset sector.” Within 60 days, each agency must submit to the Working Group chair a recommendation to either rescind or modify the regulations, guidance documents, orders, or other items identified in the initial sweep or, for items other than regulations, to adopt them in regulation.
The Order seeks to “provid[e] regulatory clarity and certainty built on technology-neutral regulations, frameworks that account for emerging technologies, transparent decision making, and well-defined jurisdictional regulatory boundaries.” To that end, the Working Group must submit a report to the president within 180 days recommending regulatory and legislative proposals that advance the Order’s policies. Any proposed regulatory framework must address the issuance and operation of digital assets (including stablecoins), and must “consider provisions for market structure, oversight, consumer protection, and risk management.”
The Order notes that one of its purposes and policies is “protecting and promoting fair and open access to banking services for all law-abiding individual citizens and private-sector entities alike.” This is likely a reference to the issues digital asset market participants reportedly faced during the Biden administration when attempting to obtain access to banking services for digital asset-related products and services (see below, Other Key Developments in Crypto). However, the Order does not otherwise expressly address fair access to banking services for digital asset market participants.
The Order does not address stablecoins directly but states that “promot[ing] the development and growth of lawful and legitimate dollar-backed stablecoins worldwide” is in the best interest of US dollar sovereignty. Though not overtly explained, the reason may be that US dollar-backed stablecoins would require the backing of extensive US Treasury bond holdings. Global stablecoin proliferation would therefore not only provide individuals in the US and abroad with access to a US dollar-based asset but could increase ongoing demand for US debt issuances.
The executive order deems CBDCs a risk that “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States.” It, therefore, prohibits any agency from pursuing the “establishment, issuance, circulation, and use of a CBDC” in the US and terminates any such activity that may currently be underway.
The Working Group must also “evaluate the potential creation and maintenance of a national digital asset stockpile.”
Senator Cynthia Lummis introduced strategic bitcoin reserve legislation in 2024, and the Order may add tailwinds to what was once thought to be a remote prospect (and may now expand beyond just bitcoin).
The Order directs the Working Group to hold public hearings and “receive individual expertise from leaders in digital assets and digital markets” as appropriate.
A persistent criticism from the digital asset industry during the Biden administration was that regulators failed to issue clear rules and instead pursued a policy of regulation by enforcement. The Order does not address specific regulatory enforcement actions, but the accompanying fact sheet states that the administration will “halt[] aggressive enforcement actions and regulatory overreach that have stifled crypto innovation under previous administrations.”
The Order revokes the Biden administration’s Executive Order 14067 on Digital Assets (March 9, 2022) (for more information, see this Latham blog post), and the Treasury Department’s Framework for International Engagement on Digital Assets (July 7, 2022), which, according to the Fact Sheet, “suppressed innovation and undermined US economic liberty and global leadership in digital finance.” The new Order also rescinds “all policies, directives, and guidance issued pursuant to” either Executive Order 14067 or Treasury’s Framework, to the extent they are inconsistent with the new Order.
New Senate Subcommittee on Digital Assets: On 23 January 2025, the Senate Committee on Banking, Housing, and Urban Affairs announced the formation of a new Subcommittee on Digital Assets, aiming to “ensure the Committee is at the forefront of legislation to provide regulatory clarity for the industry.” The subcommittee will be chaired by Senator Cynthia Lummis, a vocal crypto-industry advocate. In a statement, Senator Lummis noted that the subcommittee on Digital Assets will have two focus areas:
SEC Crypto 2.0: On 21 January 2025, SEC acting chairman Mark T. Uyeda launched a crypto task force that will be headed by SEC commissioner Hester Peirce. Commissioner Peirce is well-known for opposing prior SEC chairman Gary Gensler’s approach to crypto. She is also the author of the industry-friendly Token Safe Harbor Proposal (for more information, see this Latham blog post). According to acting chairman Uyeda, the task force is “dedicated to developing a comprehensive and clear regulatory framework for crypto assets.”
Staff Accounting Bulletin 121 (SAB 121) rescinded: On 23 January 2025, the SEC rescinded SAB 121, a controversial SEC Staff interpretation on crypto accounting from 2022. SAB 121 required SEC-registered firms that custodied digital assets on behalf of customers to record such holdings as liabilities on their balance sheets. SAB 121 deterred publicly traded banks from custodying digital assets as balance sheets reflecting custodied digital assets would result in onerous capital requirements. Congress made a bipartisan effort to repeal SAB 121 via a joint resolution of disapproval, which President Biden subsequently vetoed (for more information, see this Latham blog post).
Caroline D. Pham appointed CFTC acting chairman: On 20 January 2025, President Trump elevated CFTC Commissioner Pham to acting chairman of the CFTC. Acting chairman Pham has consistently advocated for a thoughtful and forward-looking approach to digital assets. As the head of the CFTC’s Global Markets Advisory Committee (GMAC), she proposed that the CFTC launch a pilot programme for digital asset markets, and through GMAC’s Digital Asset Markets Subcommittee (a subcommittee she established in 2023), she recommended expanding the use of non-cash collateral in derivatives markets through distributed ledger technology (for more information, see this Latham blog post). Acting Chair Pham has moved quickly to reshape the CFTC’s leadership, including directing her newly appointed chief of staff Harry Jung to lead the CFTC’s engagement on crypto, decentralized finance (DeFi), and other digital assets. She also announced a series of public roundtables “on evolving trends and innovation in market structure, including … digital assets.”
House committee investigating alleged debanking in the crypto industry: On 24 January 2025, the House Committee on Oversight and Government Reform announced an investigation into the alleged debanking of digital asset firms during the Biden administration. In a letter sent to key players in the digital asset industry, the committee said it is seeking information on the “improper debanking of individuals and entities based on political viewpoints or involvement in certain industries such as cryptocurrency and blockchain.”
The committee is seeking information on what has been commonly referred to in the industry as “Operation Choke Point 2.0.,” the alleged systematic attempt by the Biden administration to stifle digital asset growth by exerting pressure on banks and thereby preventing market participants in the digital asset industry from accessing vital banking services. Such allegations appear to have been corroborated by a cache of redacted letters that the FDIC recently released under a court order pursuant to the Freedom of Information Act.
Specifically, the committee is inquiring into the individuals and firms allegedly debanked, the financial institutions and regulators involved, the reasons for the debankings, and how debanking affected the firms’ business operations. The investigation aims to ensure that no one is unfairly targeted for debanking, and that individuals and entities “are able to participate in US markets without fear of retaliation through illicit measures undertaken by financial institutions or federal regulators.”
Participants in the digital asset industry and financial markets should stay tuned for these and other developments to continue to take shape in the weeks and months ahead.
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