The digital-asset sector finally received a supportive executive action from President Donald Trump, ending an anxious wait and opening up the tantalizing prospect of rapid progress toward a friendly regulatory backdrop.
The order signed on Thursday creates a working group of key agencies to advise the White House on crypto policy and says the industry plays a “crucial role” in US innovation, economic development and international leadership.
The working group includes the Treasury and Justice Departments as well as the Securities & Exchange Commission and the Commodity Futures Trading Commission, among others. The sector had expected Trump to act as early as Monday after his inauguration but topics like trade and energy were first in line.
The working group will be tasked with submitting a report to the president within approximately six months recommending a regulatory framework and legislative proposals, including evaluating the creation of a crypto stockpile.
Regulated stablecoins
Under the rubric of supporting responsible growth of digital assets, the order throws its weight behind encouraging regulated dollar-backed stablecoins while seeking to prohibit central bank digital currencies. The latter, so-called CBDCs, pose risks to the financial system, privacy and US sovereignty, the order adds.
Stablecoins are tokens pegged to fiat currencies, usually the US dollar, and are often used to park funds between crypto trades. Their value is typically underpinned by reserves of cash and bonds. Some stablecoins are increasingly being used to make payments, for example in cross-border trade.
“The market will over time realize the executive order is a huge, historic win,” said Matt Hougan, chief investment officer at Bitwise Asset Management. The presidential action “establishes crypto as a national priority, and lays an aggressive timeline for new regulation and a strategic reserve,” he added.
The president was joined at the ceremonial signing by White House artificial intelligence and crypto czar David Sacks, a venture capitalist and major political donor. In a nod to Trump, Sacks flagged the goal of making “America the world capital on crypto under your leadership.”
“You find them exciting? They might not be, except they’re going to make a lot of money for the country,” Trump said about the actions.
Campaign promises
The president’s order is a significant step toward fulfilling his campaign promises to be an advocate for the burgeoning crypto industry. On the trail, he vowed to streamline regulations, pick crypto-friendly figures to oversee the industry, support a stablecoin framework and establish a Bitcoin stockpile.
He’s already made good on some of these promises, such as picking many crypto-friendly agency heads. Trump has also followed through on a promise to pardon Ross Ulbricht, who created the notorious website Silk Road that sold illegal drugs using Bitcoin. Some in the crypto and libertarian communities had called for Ulbricht to be released.
Separately, SEC staff repealed accounting guidance that the crypto industry blamed for inhibiting banks from offering custody services for digital assets. Released in 2022, Staff Accounting Bulletin No. 121 had called on businesses to account for customers’ cryptoassets as their own by listing them on their balance sheets.
The digital-asset market took the widely expected executive order and repeal of the accounting guidance in its stride. Bitcoin climbed 1.5% to about $104,800 as of 5:25 a.m. Friday in London. Smaller tokens such as Ether and Solana pushed higher too.
“I don’t think any of what Trump will eventually do is priced into the market,” said Edward Chin, co-founder of Parataxis Capital. “The executive orders are fine, but I think the real legislation will be forthcoming.”
Trump’s about-face
Trump used to be a skeptic about digital assets but pivoted to embracing the sector on the campaign trail, in part as the industry ramped up its involvement in the election through sizable political donations.
He and his wife Melania unveiled new memecoins just before his swearing in. Such coins are highly volatile tokens with no underlying assets to back up their value and no obvious practical purpose.
The president’s previous forays into crypto include issuing collections of nonfungible tokens, digital collectibles that show him in a variety of poses and costumes. Along with his sons, he’s also endorsed World Liberty Financial, a project that has been much-hyped but for which details remain scarce.
Bitcoin is up more than 50% since Trump’s election victory in early November. The largest digital asset reached a record high of $109,241 ahead of his swearing in. The rally subsequently moderated.
