Trump assigns cryptocurrency group to review stockpile.

Summary

A working group is directed to begin developing crypto rules.
further mandates that financial services for cryptocurrency businesses be safeguarded
The US central bank's digital currency generation is prohibited by the order.
During his presidential campaign, Trump courted cryptocurrency cash.

January 23 (Reuters): As part of his pledge to swiftly restructure U.S. cryptocurrency policy, U.S. President Donald Trump on Thursday authorized the formation of a working group dedicated to developing new regulations for digital assets and investigating the establishment of a national cryptocurrency stockpile.

Alluding to industry accusations that U.S. regulators have instructed lenders to cut off crypto companies from banking services—a charge that regulators deny—the highly anticipated action also mandated that banking services for crypto companies be protected. Additionally, the directive prohibited the development of digital currencies issued by U.S. central banks that would rival those already in use.

The U.S. Securities and Exchange Commission revoked accounting guidance late Thursday that had made it prohibitively costly for certain listed firms to protect cryptocurrency assets on behalf of third parties, marking yet another significant move supported by the crypto industry. The adoption of digital assets has been hindered by the instructions, according to the crypto industry.

Trump courted cryptocurrency during the campaign by promising to be a “crypto president” and encourage the use of digital assets. This stands in sharp contrast to the actions of former President Joe Biden’s regulators, who slapped

down on the business in an effort to shield Americans from fraud and money laundering. They sued exchanges Coinbase, Binance, and dozens more, claiming they were breaking U.S. laws. The businesses refute the accusations.

The cryptocurrency industry, which had been calling for the incoming government to deliver a clear signal of support in Trump’s first few days in office, applauded Thursday’s announcement.

Nathan McCauley, CEO and co-founder of the cryptocurrency startup Anchorage Digital, stated, “Today’s crypto executive order marks a sea change in U.S. digital asset policy.”

“By taking a whole-of-government approach to crypto, the Administration is making a significant first step toward writing clear, consistent rules of the road.”

According to regulatory and cryptocurrency experts, Trump’s directive could help cryptocurrencies gain traction if it is carried out by the appropriate authorities. It comes after the SEC said on Tuesday that it was forming a taskforce to restructure its crypto policy.

Despite being down to over $103,000 as of late Thursday afternoon, Bitcoin reached a new record high of $109,071 on Monday due to investor optimism on the new administration’s support for cryptocurrencies.

The Senate Banking Committee’s Republican chair, Senator Tim Scott, released a statement saying, “Just days into his administration, President Trump is delivering on his promises… to keep the United States a leader in digital assets innovation.”

For years, the sector has maintained that current U.S. regulations are unsuitable for cryptocurrencies and has urged lawmakers and regulators to draft new ones that make it clearer when a cryptocurrency token qualifies as a security, commodity, or another type of token.

The directive directs the Treasury secretary, the chairs of the SEC and Commodity Futures Trading Commission, and other agency heads to form a working group to design a regulatory framework for digital assets. This includes cryptocurrencies known as stablecoins, which are usually based on the value of the US dollar.

The team will also “evaluate the potential creation and maintenance of a national digital asset stockpile… potentially derived from cryptocurrencies lawfully seized by the Federal Government through its law enforcement efforts.”

Analysts and legal experts disagree on whether a congressional act will be required, and the order did not specify how such a stockpile would be established. Some have suggested that the U.S. Treasury’s Exchange Stabilization Fund, which may be used to buy or sell foreign currencies and retain bitcoin, could be used to establish the reserve.

Trump appointed David Sacks, a former PayPal (PYPL.O) executive and venture capitalist, as the czar for artificial intelligence and cryptocurrency in December. The directive stated that he would chair the group.

FAQ

What is the primary purpose of the cryptocurrency working group authorized by Trump?

The working group aims to develop clear regulations for digital assets and explore the establishment of a national cryptocurrency stockpile. This effort aligns with Trump’s commitment to reshape U.S. cryptocurrency policy and support the adoption of digital assets.

What measures are included in the directive to support cryptocurrency businesses?

The directive mandates safeguarding banking services for cryptocurrency businesses, addressing industry concerns that regulators have restricted these services. It also rolls back certain SEC guidelines that previously made it expensive for listed companies to protect crypto assets on behalf of others.

Why does the directive prohibit the creation of a U.S. central bank digital currency (CBDC)?

The prohibition is intended to prevent competition between a U.S. government-issued digital currency and existing cryptocurrencies. This aligns with Trump’s campaign promise to foster the use of private digital assets rather than government-controlled alternatives.

How has the cryptocurrency industry reacted to this directive?

The industry has largely welcomed the move, seeing it as a positive step toward creating a clear and consistent regulatory framework. Leaders like Nathan McCauley of Anchorage Digital view the executive order as a “sea change” in U.S. digital asset policy.

What is the significance of the national cryptocurrency stockpile mentioned in the directive?

The stockpile would potentially consist of digital assets lawfully seized by the federal government. Analysts believe it could enhance the government’s role in the crypto economy, though its establishment details remain unclear and may require further legislative action.