Author: Weilin, PANews
Major Shift! Trump Signs Crypto Executive Order, Plans to Establish Digital Asset Reserve, SEC Withdraws SAB 121
On January 23, the third day of his term, Trump signed the Executive Order on "Ensuring Responsible Development of Digital Assets". The order establishes a "President's Digital Asset Markets Working Group" to explore federal regulatory measures for stablecoins and a national digital asset reserve, and explicitly prohibits the "establishment, issuance, or circulation" of central bank digital currencies (CBDCs).
Simultaneously, the U.S. Securities and Exchange Commission (SEC) announced the withdrawal of the controversial Staff Accounting Bulletin (SAB) 121 for the crypto industry.
While it is unclear whether the courts will reject some of the legal and policy actions taken by the U.S. President through executive orders, Trump has fulfilled many of the promises he made at the Bitcoin conference last July, and is expected to almost completely overturn the previous crypto regulatory model.
Crypto Executive Order: Establishing a Presidential Working Group, Evaluating a National Digital Asset Reserve
The executive order states that the digital asset industry plays a critical role in U.S. innovation and economic development, and is also crucial to America's international leadership. Therefore, the administration's policy is to support the responsible growth and adoption of digital assets, blockchain technology, and related technologies across the economy.
Key points of the executive order include:
- Protecting and promoting the ability of citizens and private sector entities to lawfully access and use open public blockchain networks, including the ability to develop and deploy software, participate in mining and validation, transact without illegal surveillance, and maintain self-custody of digital assets.
- Advancing the responsible development of dollar-backed stablecoins globally.
- Protecting and promoting the right of all law-abiding citizens and private sector entities to fairly and openly access banking services.
- Providing regulatory clarity and certainty based on technological neutrality, building a framework, transparent decision-making processes, and clear regulatory boundaries for emerging technologies.
- Prohibiting any entity from taking action to establish, issue, or promote CBDCs within or outside the United States, except as required by law. Immediately terminating any entity's existing plans or actions related to CBDC creation.
- Establishing a President's Digital Asset Markets Working Group within the National Economic Council, led by a Special Advisor on AI and Crypto, with members including the Secretaries of the Treasury, Justice, and Commerce, the SEC Chair, and the CFTC Chair.
The order also requires relevant agencies to identify all regulations and guidance affecting the digital asset industry within 30 days, and to submit amendment recommendations to the Special Advisor within 60 days. The Working Group must then submit a report to the President within 180 days, proposing regulatory and legislative recommendations to advance the policies of the order, including (i) a federal regulatory framework for the issuance and operation of U.S. digital assets (including stablecoins), and (ii) an assessment of the potential to create a U.S. digital asset reserve and standards for such a reserve.
Trump Has Fulfilled Most of His Crypto Promises
Currently, Trump has realized most of his crypto promises. Ordering federal agencies to halt any potential CBDC development was one of Trump's campaign promises to the crypto industry. Recently, Trump also fulfilled his promise to pardon "Silk Road" founder Ross Ulbricht. On January 20, Gary Gensler officially stepped down, effectively realizing Trump's promise to "fire Gary Gensler on his first day in office".
However, since taking office, Trump has not commented on fulfilling his promise that "all Bitcoin should be 'Made in America'".
While Trump is pushing policies through executive orders, their effectiveness may also face some procedural impacts. For example, on January 20, Trump signed an executive order that effectively repealed the 14th Amendment's birthright citizenship, but this move was subsequently blocked by a federal judge on the grounds of being "blatantly unconstitutional".
SEC Officially Withdraws Crypto Accounting Policy SAB 121
Alongside the White House's executive order, the SEC is also working to reverse its previous crypto regulatory approach.
On January 24, the SEC issued a new Staff Accounting Bulletin, announcing the withdrawal of the controversial SAB 121. "The staff reminds entities that they continue to be subject to existing disclosure requirements to inform investors about the entity's obligations with respect to crypto assets held for others," the bulletin stated.
SAB 121 required banks and other public companies to record their clients' crypto assets on their own balance sheets. SAB 122 "withdraws the previous interpretive guidance" and instead directs companies to follow the rules of the Financial Accounting Standards Board (FASB) or the relevant provisions of International Accounting Standards.
Since its introduction in March 2022, SAB 121 has been highly controversial, with the support of former SEC Chair Gary Gensler, who said the rule would protect investors in bankruptcy events. "We've actually found in bankruptcy courts time and time again that bankruptcy courts have ruled that crypto assets are not bankruptcy remote assets," he said in an interview with Reuters in 2023.
Issued in late March 2022, SAB 121 aimed to better protect investors by detailing how companies should account for their crypto custody services. Due to the unique risks of crypto assets, staff believed companies should record a liability and corresponding asset on their balance sheets at fair value.
In simple terms, if a bank held $1 billion worth of Bitcoin for clients, they would have to hold $1 billion in cash to offset that "liability" on their balance sheet. The crypto industry widely feared this could prevent banks from custodying digital assets, effectively excluding them from the crypto market.
Last year, SAB 121 became the subject of a Congressional Review Act resolution, which passed Congress but was vetoed by then-President Biden. Now, the SEC's withdrawal of SAB 121 marks a significant change in crypto industry regulation.
With Trump's signing of the crypto executive order and the SEC's announcement to withdraw SAB 121, the U.S. crypto regulatory landscape has reached a milestone. These actions bring more regulatory clarity to the industry and generate new expectations for the future. The transformation still requires time, and it remains to be seen whether the Trump administration can truly deliver on its promises and further advance the digital asset reserve plan.
