Introduction

On January 23, 2025, U.S. President Donald Trump officially signed an executive order on artificial intelligence and cryptocurrency in the Oval Office of the White House, announcing the establishment of the Crypto Task Force. The task force aims to develop a new regulatory framework for digital assets and explore the creation of a national cryptocurrency reserve.

Source: cnbc.com

Overview

An executive order is a directive signed, written, and published by the President of the United States to manage the operations of the federal government, without the need for congressional approval. Executive orders and proclamations have the force of law but are not considered laws. Only the sitting U.S. President can overturn an existing executive order by issuing another one.

Objectives and Policies

The U.S. government supports the responsible development of digital assets and blockchain technology to ensure economic freedom and global leadership. Specifically, this includes:

1. Protecting citizens’ freedom to use public blockchains, including the rights to trade, mine, validate, and self-custody digital assets.

2. Promoting U.S. dollar sovereignty and supporting the development of compliant U.S. dollar-backed stablecoins.

3. Ensuring fair access to banking services for citizens and businesses.

4. Providing a technology-neutral, transparent, and clear regulatory framework to support digital economy and blockchain innovation.

5. Protecting U.S. citizens from financial, privacy, and sovereignty risks posed by Central Bank Digital Currencies (CBDCs), and prohibiting the issuance and use of CBDCs.

Source: whitehouse.gov

Specific Introduction:

Revocation of Old Policies

The new executive order formally revokes Executive Order 14067, issued by the Biden administration on March 9, 2022, as well as the U.S. Department of the Treasury’s “Framework for International Cooperation on Digital Assets,” published on July 7, 2022.

According to the “Situational Brief,” these policies were criticized for “stifling innovation and undermining America’s economic freedom and global leadership in digital finance.” Additionally, the new order instructs the Secretary of the Treasury to revoke all conflicting policies, directives, and guidelines to promote a more open regulatory environment for digital assets.

Source: home.treasury.gov

Establishment of the Presidential Digital Asset Market Task Force

A task force has been established, led by a special advisor to the president, with members from agencies such as the Department of the Treasury, Department of Justice, Department of Commerce, and the Securities and Exchange Commission (SEC).

The task force will review existing regulations within 60 days and recommend whether to amend or revoke them.

Within 180 days, the task force will submit regulatory and legislative proposals, including a framework for stablecoin regulation and a feasibility study on creating a national digital asset reserve.

Ban on Central Bank Digital Currency (CBDC)

Although the Biden administration did not formally advance CBDC legislation, the 2022 executive order instructed the Treasury Department and the Federal Reserve to assess its impact and release reports on technical feasibility and regulatory frameworks. In 2023, the Treasury Department formed a special CBDC task force, and the Federal Reserve began testing wholesale CBDCs.

However, the new executive order fully bans any entity in the U.S. from creating, issuing, or promoting CBDCs, immediately terminating all related government initiatives. The order views CBDCs as a potential risk, believing they could threaten financial system stability, individual privacy, and national sovereignty, thus strictly limiting their circulation and use domestically.

Source: federalreserve.gov

Bitcoin Strategic Reserve

The task force must also “assess the possibility of establishing and maintaining a national digital asset reserve.”

Senator Cynthia Lummis proposed strategic Bitcoin reserve legislation in 2024.

Source: lummis.senate.gov

Clear Regulatory Framework

During the Biden administration, U.S. regulatory agencies took a hardline enforcement approach toward the cryptocurrency industry. Without a clear regulatory framework, this increased market uncertainty.

For instance, the SEC filed lawsuits against exchanges like Coinbase, Binance, and Kraken, accusing them of operating unregistered securities trading platforms, and forced Kraken to shut down its staking services. The CFTC also sued Binance, accusing it of illegally offering derivatives trading to U.S. users. Additionally, the Department of Justice filed charges against FTX founder SBF, accusing him of fraud and money laundering.

This executive order aims to provide a technology-neutral regulatory framework that adapts to emerging technologies, ensuring transparency in decision-making and clearly defining judicial oversight boundaries. According to the order, the task force must submit a report to the president within 180 days, offering regulatory and legislative recommendations to advance related policies.

Any proposed regulatory framework must cover the issuance and operation of digital assets (including stablecoins) and comprehensively consider market structure, regulatory oversight, consumer protection, and risk management requirements.

Source: cftc.gov

Fair Access
The order emphasizes “protecting and promoting the fair and open access to banking services for all law-abiding citizens and private businesses,” potentially addressing the barriers faced by digital asset market participants when accessing related banking services during the Biden administration.
However, the order does not specifically outline how to ensure that digital asset businesses can fairly access banking services, leaving some ambiguity regarding policy implementation.

Industry Collaboration
The order requires the task force to hold public hearings and, when appropriate, incorporate expert opinions from the fields of digital assets and digital markets.

Execution: Cryptocurrency Task Force

The U.S. Securities and Exchange Commission (SEC) has announced the formation of a cryptocurrency task force. The task force will be led by high-ranking officials, including the Secretary of the Treasury, Attorney General, SEC Chairman, and Chairman of the Commodity Futures Trading Commission (CFTC). David Sacks, a special advisor on artificial intelligence and cryptocurrency, will chair the task force.

The role of Treasury Secretary will be filled by Scott Bessent, a senior hedge fund manager who is supportive of cryptocurrency.

At the SEC, Mark Uyeda has taken over as acting chairman, replacing Gary Gensler, who previously took a hardline regulatory stance on the crypto industry.

It is notable that key U.S. banking regulators, such as the Federal Reserve Board (FRB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and National Credit Union Administration (NCUA), were not included in the task force.

Given that the prior “Operation Choke Point 2.0” was seen as a government initiative to suppress the cryptocurrency industry, and the Federal Reserve’s refusal to allow Custodia Bank to open a main account has further fueled concerns about regulatory crackdowns.

The main account functions as a “VIP channel” for banks, providing direct access to the Federal Reserve, speeding up fund transfers, and reducing operating costs. However, Custodia Bank was denied access due to its involvement in cryptocurrency services, leading the market to speculate that the government may be deliberately restricting the development of the crypto industry. This move has sparked widespread attention and debate.

Source: sec.gov

SEC Commits to Establishing a Clear Regulatory Framework

In its announcement, the SEC acknowledged that it had primarily relied on enforcement actions to regulate the crypto industry in the past, using retrospective and unclear legal interpretations, which led to a lack of transparency in the market, limited innovation, and inadvertently encouraged fraudulent activities.

The newly established cryptocurrency task force will focus on:

• Defining clear regulatory boundaries to avoid market confusion caused by ambiguous policies.
• Providing feasible registration pathways to enable crypto businesses to operate in compliance.
• Creating a reasonable disclosure framework to increase industry transparency.
• Optimizing the allocation of enforcement resources to combat fraud rather than restrict legitimate innovation.

The SEC emphasized that the task force will operate within the statutory framework provided by Congress and will offer technical support to Congress when legal updates occur, ensuring that regulatory policies evolve with industry developments.

Source: sec.gov

Timeline

The executive order requires:

Within 30 days, the Department of the Treasury, Department of Justice, SEC, and relevant agencies must comprehensively review existing regulations, guidelines, orders, and other policies affecting the digital asset industry.

Within 60 days, these agencies must submit evaluation reports to the President, recommending which regulations, documents, or orders should be amended, revoked, or incorporated into a new regulatory framework.

Within 180 days, the task force must submit a comprehensive report to the President, providing specific regulatory and legislative recommendations, including:

1. Federal Regulatory Framework – Establishing a framework for regulating the issuance and operation of digital assets (including stablecoins) in the U.S., covering market structure, regulatory systems, consumer protection, and risk management.

2. National Digital Asset Reserve – Assessing the feasibility of a reserve and developing standards, potentially utilizing cryptocurrency seized by government enforcement as a reserve source.

3. Execution and Coordination – The President will appoint an executive director to manage the day-to-day operations of the task force, consulting with the National Security Council on national security matters.

4. Industry Participation – Holding public hearings, where permissible by law, to invite expert opinions from digital asset and market specialists.

This order aims to strengthen the cryptocurrency industry’s regulatory framework while enhancing the U.S.’s global competitiveness in the digital asset sector.

Comparison of Crypto Policies between Trump and Biden Administrations

The Trump administration’s policy direction tends to support the development of the cryptocurrency industry, reduce regulatory barriers, and ensure the smooth execution of policies through key appointments. In contrast, the Biden administration focuses on strengthening regulation, emphasizing risk control, and its key appointees generally have a cautious or strict regulatory stance toward cryptocurrencies.

Source: cnbc.com

Outlook Forecast

Trump’s executive order on crypto signals a shift towards a crypto-friendly policy in the U.S., with short-term market optimism. The long-term outlook depends on legislative and regulatory dynamics. If Congress cooperates with the Trump administration to push crypto-friendly legislation, the U.S. may become one of the most attractive crypto markets globally.

1. Web3 Industry Development Will Gain Policy Support

This order supports the responsible development of blockchain technology and digital assets while protecting citizens’ rights to use crypto assets. The policy may lead to:

Price increase of major cryptocurrencies like Bitcoin and Ethereum: A friendly policy stance could boost investor confidence.

Mining sector recovery: The order emphasizes citizens’ right to mine and verify transactions, which may drive the expansion of U.S. mining companies.

Benefits for the stablecoin industry: The support for compliant USD-backed stablecoins could lead issuers like USDT and USDC to strengthen cooperation with the government and further expand the USD stablecoin market.

2. Clearer Regulatory Environment, Ending the “Guidance-Based Regulatory Framework” Model

Biden’s Executive Order 14067 was primarily a guidance document, setting the overall direction for U.S. cryptocurrency regulation, but it did not directly introduce new laws or regulations, resulting in some legal uncertainties for crypto projects.

Revoking this order could signal a shift away from strict regulatory frameworks and toward market-oriented policies, further clarifying the direction of cryptocurrency regulation.

The SEC’s (Securities and Exchange Commission) regulatory power may be weakened, especially in determining the securities status of digital assets, which could reduce the legal risks faced by crypto projects. Meanwhile, the CFTC (Commodity Futures Trading Commission) may gain greater regulatory authority, as its regulatory approach to crypto is relatively more lenient, potentially allowing more room for market growth.

This executive order rejects the “regulatory ambiguity + enforcement crackdown” strategy seen during the Biden administration and instead emphasizes technological neutrality, transparent rules, and market freedom, offering clearer compliance pathways for crypto businesses and promoting the industry’s steady development.

Source: presidency.ucsb.edu

3. Financial Institutions May Reopen Crypto Services

In recent years, U.S. banks have been cautious towards the crypto industry. However, the executive order mandates fair access to banking services for citizens and businesses, which may encourage banks to reintroduce crypto-related services such as trading, custody, and payments.

Traditional financial companies like BlackRock and Fidelity may accelerate their entry into the crypto space, further driving mainstream adoption. The order repeals restrictions from the Biden era, alleviating the effects of “Operation Choke Point 2.0” (a systemic blockade by banks on the crypto industry). This creates a more favorable environment for integrating traditional finance and crypto, ensuring that law-abiding companies are no longer denied banking services due to policy risks.

4. Tax and Compliance Reforms

The order aims to simplify cryptocurrency taxation, reduce the complexity of reporting processes, and increase institutional investor participation.

It may push Congress to pass new legislation to create specialized tax policies for the crypto industry, instead of applying traditional securities and commodity regulations.

5. Acceleration of USD Stablecoin Globalization

The executive order comprehensively bans CBDCs, which may impact the Federal Reserve’s CBDC research progress and could undermine global confidence in CBDCs.

By supporting USD sovereignty and encouraging compliant USD-backed stablecoins, the order may drive global enterprises and financial institutions to increase their reliance on stablecoins like USDT and USDC, further solidifying the U.S. dollar’s dominance in the global crypto market.

Some countries may speed up stablecoin regulation, with regions like the EU or Japan potentially following the U.S. by introducing similar compliance frameworks.

Source: federalreserve.gov

6. The U.S. May Become a Crypto Safe Haven, Driving Market Openness and Attracting Capital and Enterprises Back

With the policy shift, the U.S. is poised once again to become a core market for the crypto industry. Domestic companies like Coinbase and Circle may expand their businesses, and compared to stricter regulatory environments in regions like the EU and Japan, the U.S. could become the preferred destination for crypto startups, further driving industry innovation.

In recent years, due to regulatory uncertainty, many crypto companies moved to friendly jurisdictions such as Singapore, Hong Kong, and the UAE. However, Trump’s pro-business policies are expected to facilitate the return of businesses to the U.S. and attract more venture capital into the Web3 space.

Risks

Under the current circumstances, there are potential risks surrounding Trump’s crypto executive order and global digital asset regulation:

1. Uncertainty of Congressional Legislation

Although Trump signed the executive order, whether Congress will push for further legislation remains unclear. If there are significant differences between the Republican and Democratic parties, the regulatory framework could still face uncertainty in the future.

Some lawmakers, such as Elizabeth Warren, may continue to push for stricter anti-money laundering and tax regulations for crypto, which could create resistance for the industry.

Source: warren.senate.gov

2. Increased Regulatory Uncertainty

Policy Change Risks: Although Trump’s executive order aims to promote the development of the crypto industry, the policy direction could shift depending on political changes. For instance, the future government might tighten regulations or reverse current policies.

Fragmented Regulatory Risks: By excluding the Federal Reserve and FDIC from the task force, the regulatory framework could become fragmented, potentially affecting market stability and increasing compliance costs.

Moreover, even if federal regulations become more lenient, crypto companies must focus on key compliance issues and navigate complex state-level regulations. Some states’ stringent policies may even conflict with federal policies.

For example, crypto companies operating in New York must still comply with the “BitLicense” regulatory framework, and California’s recent Digital Financial Assets Act requires companies to obtain licenses. Additionally, the Money Transmission Licensing laws in several states still apply to the crypto industry, and businesses must ensure compliance with varying state regulations.

California’s upcoming Digital Financial Assets Act (2025) requires crypto companies to obtain state-level licenses to offer related services, raising market entry barriers.

Washington State has implemented the Money Transmission Law (MTL), imposing stricter regulations on crypto companies, requiring them to hold money transmission licenses and provide deposit guarantees, significantly increasing compliance costs. As a result, some exchanges, like Kraken, have chosen to exit this market.

New York’s BitLicense regulations are even more stringent, requiring all companies involved in virtual currency activities to meet strict capital reserve requirements, compliance reviews, and cybersecurity standards, further limiting the operational freedom of crypto businesses.

Source: dfpi.ca.gov

3. Potential Impact of U.S. Promotion of Dollar Stablecoins vs. CBDC

International Financial Friction: The U.S. support for developing dollar-backed stablecoins could weaken other countries’ trust in Central Bank Digital Currencies (CBDCs), sparking geopolitical financial competition. This may encourage some countries to accelerate their de-dollarization efforts.

Compliance Challenges: Promoting dollar stablecoins involves KYC/AML (Know Your Customer/Anti-Money Laundering) requirements. If regulatory measures are insufficient, these stablecoins could be used for illicit activities, leading to further policy crackdowns.

4. Investor Protection and Market Manipulation Risks

Market Manipulation Risks: Trump and his family could issue meme coins like “$Trump” and “$Melania” to encourage speculative market behaviors. If the market is overly hyped or manipulated, ordinary investors might become “bag holders.”

Fraud and Compliance Risks: In a more lenient regulatory environment, more projects could seize the opportunity to raise funds, but some might involve fraud or Ponzi schemes, increasing the risks to investors.

Source: gate.io/trade/TRUMP_USDT

5. Regulatory Incoherence Triggering Global Market Fluctuations

Inconsistent Cross-Border Regulation: While the EU has implemented the MiCA regulatory framework, the U.S. regulatory strategy is still in flux, causing multinational companies and investors to face compliance challenges across different jurisdictions.

Policy Spillover Effects: The U.S. policy shift could influence other countries’ attitudes toward crypto assets. For example, China, the EU, or emerging markets may adopt stricter or more lenient regulatory strategies, impacting global market trends.

For instance, the EU also took a major step in crypto asset regulation. On December 30, 2024, the EU’s Markets in Crypto-Assets (MiCA) regulation came into full effect, making the 27 member states the first major jurisdiction to establish a comprehensive crypto asset regulatory framework. MiCA was approved by the European Parliament in April 2023, providing a key regulatory model for the global crypto industry.

Source: esma.europa.eu

6. CBDC Development Faces Setbacks

Impact on Federal Reserve’s CBDC Research: The Trump administration’s support for USD-backed stablecoins over CBDCs could weaken the Federal Reserve’s competitiveness in the digital currency space, potentially leaving the U.S. behind China (with the digital yuan) or the EU (with the digital euro) in the CBDC race.

7. Systemic Risks in the Stablecoin Industry

Banking System Dependency: If the market cap of USD-backed stablecoins grows rapidly, their dependency on the U.S. banking system will also increase. In the event of a banking crisis, stablecoins’ liquidity could be restricted, leading to market panic.

“Shadow Banking” Issue: Stablecoin issuers may operate in regulatory gray areas. If they fail to adhere to reserve management requirements strictly, it could lead to “shadow banking” problems similar to those seen during the 2008 financial crisis.

8. National Digital Asset Reserves Could Spark Legal and Compliance Disputes

Asset Seizure Disposal Issues: If the U.S. government includes seized cryptocurrencies in its national digital asset reserves, it may spark market controversy and legal risks. For example, ownership disputes could arise over some of the assets.

For instance, the U.S. government has seized a large amount of Bitcoin through crackdowns on cybercrime, money laundering organizations, and dark web activities. According to bitcoinreasuries.net, the U.S. government currently holds 198,109 BTC, valued at approximately $19.15 billion at current prices. (February 17, 2025)

Source: bitcointreasuries.net

Conclusion

The Trump administration’s crypto executive order provides a clearer policy direction for the U.S. digital asset industry. It promotes the development of USD-backed stablecoins while reducing excessive regulation that stifles innovation. However, this policy shift comes with potential risks, including fragmented regulation, market speculation, and international financial tensions.

Looking ahead, the development of the global crypto market will depend on the coordination of regulatory policies across countries, the participation of institutional investors, and the application of technological innovations. U.S. policy adjustments may trigger a chain reaction that impacts the global digital financial landscape. In this transformation era, investors and market participants must closely monitor policy developments, carefully assess risks, and seize new opportunities in the digital asset industry.