Original author: KarenZ, Foresight News
Today, US President Trump officially signed the Enhancing Americas Leadership in Digital Financial Technology crypto executive order. This executive action not only marks the US governments attention to the digital asset industry, but also provides a clear policy framework for its future development. So what are the core contents of the executive order? What are the potential impacts?
TL;DR
1. Protect encryption rights (development and deployment of related software, self-hosting, trading, mining);
2. Ban CBDC;
3. Protect the sovereignty of the US dollar and support stablecoins backed by the US dollar;
4. A new regulatory framework will be introduced after 180 days that will regulate the issuance and operation of digital assets and evaluate the possibility of establishing and maintaining a national digital asset reserve (the reserve may come from cryptocurrencies that the federal government has lawfully seized through its law enforcement work).
5. All institutions must review existing rules affecting the digital asset industry within 30 days and submit a response within 60 days on whether existing regulations or guidance should be revoked or modified.
Encrypting the core content of the executive order
Supporting innovation and responsible development
The executive order states that it is the policy of the Administration to support the responsible development and use of digital assets, blockchain technology, and related technologies across all sectors of the economy, including:
1. Protect and promote the ability of individual citizens and private entities to lawfully access and use open public blockchain networks, including the ability to develop and deploy software, participate in mining and validation, transact with others without unlawful censorship, and self-custody digital assets;
2. Promote and protect the sovereignty of the US dollar, including taking actions to promote the development and growth of global legal and compliant US dollar stablecoins;
3. Protect and promote fair and open access to banking services for all law-abiding citizens and private entities;
4. Providing regulatory clarity and certainty based on technology-neutral regulations, developing frameworks that take into account emerging technologies, ensuring transparent decision-making, and clearly defining regulatory boundaries are essential to supporting a vibrant and inclusive digital economy and innovation in digital assets, permissionless blockchains and distributed ledger technologies;
5. Take measures to protect Americans from the risks of central bank digital currency (CBDC), including prohibiting the establishment, issuance, circulation, and use of CBDC within the United States to prevent it from posing a threat to the stability of the financial system, personal privacy, and U.S. sovereignty.
Repeal old policies and establish new frameworks
1. Rescind Executive Order No. 14067 (Ensuring the Responsible Development of Digital Assets) issued on March 9, 2022.
2. The Secretary of Finance should immediately revoke the Framework for International Engagement in Digital Assets issued by the Ministry of Finance on July 7, 2022.
According to the executive order, today, the U.S. Securities and Exchange Commission (SEC) officially revoked the crypto asset accounting standard SAB-121. SAB-121 is a guidance issued by the U.S. SEC in 2022, requiring companies holding cryptocurrencies to record these assets on their balance sheets and disclose related risks. The announcement applies to all SEC-regulated entities, especially banks and financial institutions, and may result in them facing higher capital requirements, thereby affecting their ability to provide cryptocurrency custody services.
In this regard, US Senator Cynthia Lummis said that the revocation of SAB 121 puts the SEC back on track. MicroStrategy founder Michael Saylor said that the repeal of SAB 121 allows banks to custody Bitcoin.
Establishment of the Presidential Task Force on Digital Asset Markets
To coordinate the actions of various departments, the executive order established the Presidential Digital Asset Market Working Group. The working group is led by David Sacks (Chairman), Special Advisor for Artificial Intelligence and Cryptocurrency, and also includes heads of multiple departments such as the Treasury Department, Justice Department, and Commerce Department, such as the Secretary of the Treasury, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Assistant to the President for National Security Affairs, the Assistant to the President for National Economic Policy (APEP), the Assistant to the President for Science and Technology, the Homeland Security Advisor, the Chairman of the Securities and Exchange Commission, and the Chairman of the Commodity Futures Trading Commission.
What does the Working Group’s legislative proposal include?
Within 30 days of the date of this order, the Treasury Department, the Justice Department, the Securities and Exchange Commission, and other relevant agencies (including the heads of the Task Force) shall identify all regulations, guidance documents, orders, or other items that affect the digital asset industry. Within 60 days of the date of this order, each agency shall submit to the Chairman a recommendation on whether each identified regulation, guidance document, order, or other item should be rescinded or modified or, in the case of items other than regulations, should be adopted in regulation.
Within 180 days of the date of this order, the Task Force shall submit a report to the President, through APEP, that recommends regulatory and legislative proposals to advance the policies set forth in this order, including:
1. The working group should propose a federal regulatory framework to regulate the issuance and operation of digital assets (including stablecoins) in the United States. The report should consider provisions for market structure, supervision, consumer protection, and risk management.
2. The Working Group should evaluate the possibility of establishing and maintaining a national digital asset reserve and propose criteria for establishing such a reserve, which could be derived from cryptocurrency lawfully seized by the Federal Government through its law enforcement efforts.
3. The Chairman shall designate an Executive Director of the Working Group to coordinate its day-to-day functions. The Working Group shall consult with the National Security Council on matters involving national security.
4. Where appropriate and consistent with the law, the Working Group shall hold public hearings and seek input from experts in the field of digital assets and digital markets.
Banning Central Bank Digital Currency
The executive order states that unless otherwise required by law, agencies shall not take any action to establish, issue, or promote CBDC within or outside the United States. In addition, any ongoing program or initiative related to the creation of CBDC within the United States by any agency shall be terminated immediately, and no further action shall be taken to develop or implement such program or initiative.
Foresight News Note: An executive order is a signed, written, and published directive by the President of the United States that governs the operation of the federal government and does not require congressional approval. An executive order and proclamation have the force of law, but are not a law. Only the sitting President of the United States can overturn an existing executive order by issuing another executive order.
What are the potential impacts?
A 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 have more confidence in the digital asset industry due to stricter supervision and greater transparency.
In addition, by promoting the global development of the US dollar stablecoin (rather than CBDC), the United States will further consolidate the dollars dominant position in the international financial system and enhance its economic influence. At the same time, stablecoins will also usher in their own golden age and become an important bridge connecting traditional finance and digital finance.
It is worth mentioning that Trumps crypto executive order excludes the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) from the digital asset working group. The FDIC is responsible for ensuring the safety of bank deposits, and excluding the FDIC may weaken the working groups ability to protect consumer rights and maintain financial stability. The absence of the Federal Reserve and the FDIC may lead to a fragmented regulatory framework.
Regarding the establishment of a digital asset reserve, the Digital Asset Working Group shall evaluate the possibility of establishing and maintaining a national digital asset reserve, which may be derived from cryptocurrencies lawfully seized by the federal government through its law enforcement efforts. There is no indication that cryptocurrencies will be purchased from the open market.
Michael Saylor said that the crypto executive order signed by Trump marks the official start of the crypto Renaissance. This executive action not only provides a clear policy orientation and strong legal support for the development of the US digital asset industry, but also injects new vitality and impetus into the prosperity and development of the global digital financial market. The US policy adjustment in the field of digital assets may trigger other countries to follow suit or respond, thereby promoting global regulatory coordination and cooperation on digital assets.
