Original Article Title: "CBDC Ban, Embrace of Dollar Sovereignty, Trump Signs First Crypto Executive Order"
Original Author: KarenZ, Foresight News

Today, U.S. President Trump officially signed the "Executive Order on Ensuring United States Leadership in Digital Financial Technology" regarding cryptocurrency. This executive action not only signifies the U.S. government's attention to the digital asset industry but also provides a clear policy framework for its future development. What are the key points of this executive order, and what are the potential impacts?

TL;DR

1. Protect cryptographic rights (related software development and deployment, self-custody, transactions, mining);

2. Ban on CBDC;

3. Protect dollar sovereignty, support dollar-backed stablecoins;

4. A new regulatory framework will be implemented after 180 days to regulate the issuance and operation of digital assets and assess the possibility of establishing and maintaining a national digital asset reserve (the reserve may come from cryptocurrency lawfully seized by the federal government through its enforcement actions).

5. All institutions must review existing rules affecting the digital asset industry within 30 days and submit a report within 60 days on whether existing regulations or guidance should be revoked or modified.

Key Contents of the Crypto Executive Order

Support Innovation and Responsible Development

The executive order states that this administration's policy is to support the responsible development and use of digital assets, blockchain technology, and related technologies across all sectors, including:

1. Protecting and promoting the lawful ability of individuals, citizens, and private entities to access and use open public blockchain networks, including developing and deploying software, participating in mining and validation, transacting with others free from unlawful surveillance, and the ability to self-custody digital assets;

2. Promoting and protecting dollar sovereignty, including taking action to drive the development and growth of globally lawful and compliant dollar-backed stablecoins;

3. Safeguarding and promoting fair, open access to banking services for all law-abiding individuals and private entities;

4. Providing regulatory clarity and certainty based on technology-neutral regulations, developing frameworks that consider emerging technologies, ensuring transparent decision-making, and clearly defining regulatory boundaries, which are crucial to supporting a vibrant and inclusive digital economy and the innovation of digital assets, permissionless blockchains, and distributed ledger technologies;

5. Taking measures to protect Americans from the risks of central bank digital currencies (CBDC), including prohibiting the establishment, issuance, circulation, and use of CBDC within the United States to prevent its threat to the stability of the financial system, individual privacy, and U.S. sovereignty.

Revoke Old Policies, Establish New Framework

1. Revoke Executive Order No. 14067, titled "Ensuring the Responsible Development of Digital Assets," issued on March 9, 2022.

2. The Secretary of the Treasury shall immediately revoke the "International Digital Asset Engagement Framework" issued by the Department of the Treasury on July 7, 2022.

Under this executive order, today, the U.S. Securities and Exchange Commission (SEC) officially revokes the cryptocurrency accounting standard SAB-121. SAB-121 was a guidance issued by the SEC in 2022, requiring companies holding cryptocurrency to record those assets on their balance sheets and disclose related risks. This announcement applies to all SEC-regulated entities, especially banks and financial institutions, and may result in higher capital requirements that could affect their ability to offer cryptocurrency custody services.

In response, U.S. Senator Cynthia Lummis stated that the repeal of SAB 121 puts the SEC back on track. MicroStrategy founder Michael Saylor stated that abolishing SAB 121 allows banks to custody bitcoin.

Establishment of the President's Digital Asset Market Working Group

To coordinate actions across departments, the executive order establishes the President's Digital Asset Market Working Group. The group is chaired by Artificial Intelligence and Cryptocurrency Special Advisor David Sacks and includes heads of 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, SEC Chairman, CFTC Chairman, and others.

What is included in the Working Group's legislative proposal?

Within 30 days of the issuance of this order, the Department of the Treasury, Department of Justice, SEC, and other relevant agencies (whose heads are part of the Working Group) shall identify all regulations, guidance documents, orders, or other items affecting the digital asset industry. Within 60 days of the issuance of this order, each agency shall submit to the Chair recommendations on whether to revoke or modify each identified regulation, guidance document, order, or other item or, for items beyond regulations, propose incorporation into regulations.

Within 180 days of the issuance of this order, the Working Group shall submit a report to the President through APEP recommending 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) within the United States. The report should consider provisions regarding market structure, supervision, consumer protection, and risk management.

2. The working group should assess the possibility of establishing and maintaining a national digital asset reserve and propose standards for establishing such reserves, which may come from cryptocurrency legally seized by the federal government through its law enforcement efforts.

3. The Chair should appoint a working group executive director responsible for coordinating its day-to-day functions. On issues related to national security, the working group should consult with the National Security Council.

4. Where appropriate and permitted by law, the working group should hold public hearings and solicit input from experts in the digital asset and digital market fields.

Prohibition of Central Bank Digital Currency

The executive order states that unless otherwise required by law, no entity shall take any action within or outside the United States to establish, issue, or promote a CBDC. Additionally, any ongoing plans or initiatives related to creating a CBDC within the United States should be immediately terminated, and no further actions should be taken to develop or implement such plans or initiatives.

Foresight News Note: An executive order is a directive signed, written, and published by the U.S. President to manage the operation of the federal government without requiring congressional approval. Executive orders and proclamations have the force of law but are not legislation. Only the incumbent U.S. President 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 to enter the field. Meanwhile, retail investors will have more confidence in the digital asset industry due to stricter regulation and higher transparency.

Furthermore, by promoting the global development of the USD stablecoin (rather than a CBDC), the United States will further solidify the dollar's dominance in the international financial system, enhancing its economic influence. Simultaneously, stablecoins will usher in their golden age, becoming a crucial bridge connecting traditional finance with digital finance.

It is worth mentioning that Trump's 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 insuring bank deposits, and excluding the FDIC could weaken the working group's ability to protect consumer rights 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, based on an executive order, a digital asset working group is to assess the possibility of establishing and maintaining a national digital asset reserve, which may come from cryptocurrency seized by the federal government through its law enforcement work. Currently, there is no indication that cryptocurrency will be purchased from the open market.

Michael Saylor stated that the crypto executive order signed by Trump marks the official start of the crypto renaissance. This executive action not only provides clear policy guidance and robust legal support for the development of the U.S. digital asset industry but also injects new vitality and momentum into the global digital financial market. The U.S.' policy adjustments in the digital asset field may prompt other countries to follow suit or respond, thereby driving regulatory coordination and cooperation on digital assets worldwide.

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