Today, U.S. President Trump officially signed the executive order “Strengthening America’s Leadership in Digital Financial Technology.“ This action not only signifies the U.S. government’s attention to the digital asset industry but also provides a clear policy framework for its future development. What are the key points of the executive order, and what potential impacts does it have?

TL;DR

1. Protect crypto rights (development, deployment, self-custody, trading, mining);

2. Ban CBDCs;

3. Protect U.S. dollar sovereignty, support dollar-backed stablecoins;

4. New regulatory framework in 180 days to govern digital asset issuance and operations, and evaluate the creation of a national digital asset reserve (possibly sourced from crypto seized by federal agencies);

5. All agencies must review existing rules impacting digital assets within 30 days and submit recommendations on whether to revoke or modify existing regulations within 60 days.

Core Content of the Crypto Executive Order

Support Innovation and Responsible Development

The executive order emphasizes the government’s policy of supporting responsible development and use of digital assets, blockchain technology, and related technologies across all economic sectors, including:

1. Protecting and promoting individuals’ and private entities’ legal access to and use of open public blockchain networks, including the ability to develop and deploy software, participate in mining and validation, trade freely without illegal censorship, and self-custody digital assets;

2. Promoting and protecting dollar sovereignty, including actions to drive the global development and growth of legal and compliant dollar-backed stablecoins;

3. Protecting and promoting fair, open access to banking services for all law-abiding citizens and private entities;

4. Providing regulatory clarity and certainty based on technology-neutral laws, establishing a framework that considers emerging technologies, ensuring transparent decision-making, and clearly defining regulatory boundaries—key to supporting a vibrant and inclusive digital economy and innovations in digital assets, permissionless blockchains, and distributed ledger technologies;

5. Taking steps to protect Americans from the risks of central bank digital currencies (CBDCs), including prohibiting the creation, issuance, circulation, and use of CBDCs within the U.S. to prevent threats to financial system stability, individual privacy, and U.S. sovereignty.

Revoking Old Policies and Establishing a New Framework

The executive order revokes Executive Order 14067, issued on March 9, 2022, titled “Ensuring the Responsible Development of Digital Assets.”

The Secretary of the Treasury is instructed to immediately revoke the Treasury Department’s “Framework for International Participation in Digital Assets,” issued on July 7, 2022.

In line with this executive order, today the U.S. Securities and Exchange Commission (SEC) officially rescinded the cryptocurrency accounting standard SAB-121. SAB-121, issued by the SEC in 2022, required companies holding cryptocurrency to record these assets on their balance sheets and disclose associated risks. This guidance applied to all entities regulated by the SEC, particularly banks and financial institutions, and could have led to higher capital requirements, potentially impacting their ability to offer cryptocurrency custody services.

In response, U.S. Senator Cynthia Lummis stated that the revocation of SAB-121 puts the SEC back on track. Michael Saylor, founder of MicroStrategy, commented that the repeal of SAB-121 allows banks to custody Bitcoin.

Establishing the Presidential Digital Asset Market Working Group

To coordinate actions across departments, the executive order establishes the Presidential Digital Asset Market Working Group. The group will be led by David Sacks, Special Advisor on AI and Cryptocurrency, with members including heads of several departments such as the Treasury Department, the Department of Justice, the Department of Commerce, the Department of Homeland Security, the Director of the Office of Management and Budget, the President’s National Security Advisor, the President’s National Economic Policy Advisor (APEP), the President’s Science and Technology Advisor, the Homeland Security Advisor, the Chairman of the Securities and Exchange Commission (SEC), and the Chairman of the Commodity Futures Trading Commission (CFTC).

What does the Working Group’s Legislative Proposal Include?

Within 30 days of the issuance of this order, the Department of Treasury, Department of Justice, Securities and Exchange Commission (SEC), and other relevant agencies (whose heads include the Working Group leaders) shall identify all regulations, guidance, orders, or other initiatives that impact the digital asset industry. Within 60 days of the order’s issuance, each agency shall submit recommendations to the President on whether each identified regulation, guidance, order, or other initiative should be rescinded or amended. For items other than regulations, such items should be incorporated into regulations.

Within 180 days of the order’s issuance, the Working Group shall submit a report to the President through the President’s National Economic Policy Advisor (APEP). The report should recommend regulatory and legislative proposals to advance the policies outlined in this order, including:

1. The Working Group should propose a federal regulatory framework to govern the issuance and operation of digital assets (including stablecoins) in the U.S. The report should address aspects such as market structure, supervision, consumer protection, and risk management.

2. The Working Group should assess the feasibility of establishing and maintaining a national digital asset reserve and propose the standards for such reserves. These reserves may include cryptocurrency legally seized by the federal government through its enforcement efforts.

3. The President should designate an executive director for the Working Group to coordinate its day-to-day functions. On national security matters, the Working Group should consult with the National Security Council.

4. Where appropriate and consistent with the law, the Working Group should hold public hearings and seek input from experts in the digital asset and digital market fields.

Prohibition of Central Bank Digital Currency (CBDC)

The executive order states that, unless required by law, no agency may take any action within or outside the U.S. to establish, issue, or promote a CBDC. Additionally, any ongoing plans or initiatives related to the creation of a CBDC within the U.S. should be immediately terminated, and no further actions should be taken to develop or implement such plans or initiatives.

Foresight News note: An executive order is an instruction signed and published by the U.S. president to manage the operations of the federal government, which does not require congressional approval. Executive orders and proclamations have legal force but are not laws. Only the sitting U.S. president can overturn an existing executive order by issuing another executive order.

What are the potential impacts?

The clear regulatory framework and government support will provide a more stable development environment for the digital asset industry, attracting more capital and talent into the field. At the same time, ordinary investors will gain more confidence in the digital asset industry due to stricter regulations and higher transparency.

Furthermore, by promoting the global development of USD-backed stablecoins (instead of CBDCs), the U.S. will further consolidate the dollar’s dominant position in the international financial system, enhancing its economic influence. Meanwhile, stablecoins will enter a golden era, becoming an important bridge between traditional finance and digital finance.

Notably, Trump’s executive order excludes the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) from the digital asset working group. The FDIC, which is responsible for ensuring the safety of bank deposits, might have weakened the group’s ability to protect consumer rights and maintain financial stability. The absence of the Federal Reserve and FDIC may lead to a fragmented regulatory framework.

Regarding the establishment of a digital asset reserve, the executive order directs the digital asset working group to assess the possibility of establishing and maintaining a national digital asset reserve. These reserves may come from cryptocurrencies lawfully seized by the federal government through its law enforcement efforts. It has not been indicated that the government will purchase cryptocurrencies from the open market.

Michael Saylor stated that the executive order signed by Trump marks the official start of the crypto renaissance. This action not only provides clear policy guidance and strong legal support for the development of the U.S. digital asset industry, but also injects new energy and momentum into the global digital finance market. The U.S. policy adjustment in the digital asset field could prompt other countries to follow suit or respond, driving global regulatory coordination and cooperation on digital assets.

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