Today, U.S. President Trump officially signed the "Executive Order on Ensuring Responsible Development of Digital Assets" crypto executive order. This executive action not only marks the U.S. government's emphasis on the digital asset industry, but also provides a clear policy framework for its future development. What are the key contents of this executive order? What are the potential impacts?
TL;DR
1. Protect crypto rights (develop and deploy related software, self-custody, trade, mine);
2. Prohibit CBDC;
3. Protect the sovereignty of the U.S. dollar, support dollar-backed stablecoins;
4. Within 180 days, a new regulatory framework will be introduced to 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 legally seized by the federal government through its law enforcement work).
5. All agencies must review existing rules impacting the digital asset industry within 30 days, and submit recommendations on whether to revoke or modify existing regulations or guidance within 60 days.
Core Contents of the Crypto Executive Order
Support Innovation and Responsible Development
The executive order states that the administration's policy is to support the responsible development and use of digital assets, blockchain technology and related technologies across all economic sectors, including:
1. Protect and promote the ability of individuals, 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 illegal surveillance, and self-custody digital assets;
2. Promote and protect the sovereignty of the U.S. dollar, including by advancing the development and use of digital assets and related technologies consistent with United States priorities and values;
3. Protect and promote fair and equal access to banking services for all law-abiding citizens and private entities;
4. Provide regulatory clarity and certainty based on technology-neutral regulation, develop frameworks that consider emerging technologies, ensure transparent decision-making, and clearly delineate regulatory boundaries, which are critical to supporting a vibrant and inclusive digital economy and the innovation of digital assets, permissionless blockchain, and distributed ledger technology;
5. Take measures to protect Americans from the risks of Central Bank Digital Currencies (CBDCs), including prohibiting the development, issuance, and use of CBDCs within the United States, to mitigate the risks to the stability of the U.S. financial system, the privacy of U.S. persons, and the U.S. dollar.
Revoke Old Policies, Establish New Frameworks
1. Revoke Executive Order 14067 issued on March 9, 2022 ("Ensuring Responsible Development of Digital Assets").
2. The Secretary of the Treasury should immediately revoke the "Framework for International Engagement on Digital Assets" issued by the Treasury Department on July 7, 2022.
Pursuant to this executive order, today the U.S. Securities and Exchange Commission (SEC) has officially revoked the crypto asset accounting standard SAB-121. SAB-121 was guidance issued by the U.S. SEC in 2022 requiring companies holding crypto assets to record these assets on their balance sheets and disclose related risks. This notice applies to all entities regulated by the SEC, particularly banks and financial institutions, which could result in higher capital requirements and impact their ability to provide crypto custody services.
In response, U.S. Senator Cynthia Lummis said the revocation of SAB 121 puts the SEC back on track. MicroStrategy founder Michael Saylor said the repeal of SAB 121 allows banks to custody Bitcoin.
Establish the President's Digital Assets Working Group
To coordinate actions across departments, the executive order establishes the President's Digital Assets Working Group. The working group is led by David Sacks (Chair), the Special Advisor for Artificial Intelligence and Crypto, and includes heads of various departments such as the Secretary of the Treasury, Attorney General, Secretary of Commerce, Secretary of Homeland Security, Director of the Office of Management and Budget, Assistant to the President for National Security Affairs, Assistant to the President for Economic Policy (APEP), Assistant to the President for Science and Technology, Homeland Security Advisor, Chair of the Securities and Exchange Commission, and Chair of the Commodity Futures Trading Commission.
What are the Legislative Proposals of the Working Group?
Within 30 days of the issuance of this order, the Treasury Department, Department of Justice, Securities and Exchange Commission, and other relevant agencies (including the working group principals) shall identify all regulations, guidance, orders, or other actions that impact the digital asset industry. Within 60 days of the issuance of this order, each agency shall submit recommendations to the Chair on whether each identified regulation, guidance, order, or other action should be rescinded or amended, or for non-regulatory actions, adopted into regulation.
Within 180 days of the issuance of this order, the working group shall submit a report through the APEP to the President recommending regulatory and legislative proposals to advance the policies set forth in this order, including:
1. The working group shall propose a federal regulatory framework to regulate the issuance and operation of digital assets (including stablecoins) within the United States. The report should consider provisions around market structure, oversight, consumer protection, and risk management.
2. The working group shall assess the feasibility of establishing and maintaining a national digital asset reserve, and propose standards for establishing such a reserve, which may be composed of cryptocurrencies lawfully seized by the federal government through its law enforcement work.
3. The Chair shall designate a working group executive director to coordinate its day-to-day functions. On national security matters, the working group shall consult with the National Security Council.
4. Where appropriate and consistent with law, the working group shall hold public hearings and solicit input from digital asset and digital market experts.
Prohibit Central Bank Digital Currencies
The executive order states that unless otherwise required by law, no agency shall take any action to establish, issue, or promote CBDC within or outside the United States. Additionally, any agency currently engaged in plans or initiatives related to the creation of a CBDC within the United States shall immediately cease such plans or initiatives and take no further action to develop or implement such plans or initiatives.
Foresight News Note: An executive order is a written and published directive from the U.S. President used to manage federal government operations, and does not require approval from Congress. Executive orders and proclamations have the force of law, but are not legislation. Only the current U.S. President can revoke an existing executive order by issuing another one.
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 to the field. At the same time, ordinary investors will have more confidence in the digital asset industry due to stricter regulation and higher transparency.
Additionally, by promoting the global development of U.S. dollar stablecoins (rather than CBDC), the U.S. will further consolidate the dollar's dominant position in the international financial system and enhance its economic influence. Meanwhile, stablecoins will also usher in their own golden age, becoming an important bridge connecting traditional finance and digital finance.
It is worth noting that Trump's crypto executive order excluded the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) from the digital asset working group. The FDIC is responsible for protecting bank deposits, and their exclusion may weaken the working group's ability to protect consumer interests and maintain financial stability. The absence of the Federal Reserve and FDIC may lead to fragmentation of the regulatory framework.
Regarding the establishment of a digital asset reserve, according to the executive order, the digital asset working group should assess the feasibility of establishing and maintaining a national digital asset reserve, which may be composed of cryptocurrencies lawfully seized by the federal government through its law enforcement work. It is currently unclear whether cryptocurrencies will be purchased from the open market.
Michael Saylor stated that the crypto executive order signed by Trump marks the official start of a crypto renaissance. This executive 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 vitality and momentum into the prosperity and development of the global digital finance market. The U.S. policy adjustments in the digital asset field may lead to imitation or response from other countries, thereby promoting regulatory coordination and cooperation on digital assets globally.
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