The executive order also establishes a presidential working group responsible for creating a federal regulatory framework for digital assets, including stablecoins. The group will also assess the possibility of creating a national digital assets reserve.
US President Donald Trump recently signed an executive order (EO) titled “Strengthening American Leadership in Digital Financial Technology,” which is a major step for the digital financial industry. The executive order establishes regulations for digital assets like cryptocurrencies and stablecoins and prohibits the development and issuance of a central bank digital currency (CBDC) in the US, among other important clauses.
Central Bank Digital Currency (CBDC) Prohibition
The official ban on the establishment of a CBDC in the US is one of the main features of this executive order. “A type of digital currency or monetary value, denominated in the national unit of account, that is a direct liability of the central bank,” is how the EO defines a CBDC. According to the directive, authorities are “hereby prohibited from undertaking any action to establish, issue, or promote CBDCs” both domestically and internationally, “except to the extent required by law.” Furthermore, any current plans or initiatives pertaining to the establishment of CBDCs would be immediately discontinued.
Establishment of a Federal Regulatory Framework for Digital Assets
A presidential working committee is also established under the executive order with the responsibility of creating a federal regulatory framework for digital assets, such as stablecoins. One of the group’s duties will be to assess the creation of a national stockpile of digital assets. Important topics including market structure, supervision, consumer protection, and risk management in the digital asset field will be covered in the working group’s report.
Bitcoin may be the primary target of the stockpile, which will be centered on cryptocurrency that the federal government has seized. This is consistent with President Trump’s earlier promise to use Bitcoin that was confiscated during law enforcement operations to establish a strategic national reserve. The United States presently owns 198,109 Bitcoin, worth more over $20.1 billion, according to data from Arkham Intelligence.
Trump’s Plan to Build a National Bitcoin Reserve
President Trump pledged to establish a strategic national Bitcoin stockpile at the Bitcoin 2024 Conference in Nashville. He intends to use the Bitcoin that the US government has obtained through seizures and hacks. After Trump’s speech, US Senator Cynthia Lummis proposed legislation using a different strategy to establish a Strategic Bitcoin Reserve. In order to reach the goal of 1,000,000 Bitcoin, she proposes that the US government buy 200,000 Bitcoin annually for the next five years. But before it reaches the president’s desk for final approval, this law must pass both the Senate and the House of Representatives.
President Trump has also kept his campaign pledge to promote the cryptocurrency community by fully and unconditionally pardoning Ross Ulbricht, the creator of the Silk Road website and the father of Bitcoin. The creation of the Bitcoin reserve, the prohibition of the CBDC, and the formation of an advisory council devoted to digital assets are all components of Trump’s larger plan to assist the digital asset industry.
Modifications to the Regulation of Digital Assets
The Trump administration is firmly opposing the creation of a CBDC and establishing itself as a pioneer in digital financial technology with this new executive order. It is anticipated that the working group’s conclusions and the possible establishment of a strategic Bitcoin reserve will influence future cryptocurrency regulations and position the US as a major participant in the global market for digital assets.
Industry participants will be closely observing how these new regulations affect the larger cryptocurrency ecosystem as well as whether other countries will follow suit in outlawing CBDCs or creating comparable Bitcoin reserves as the legislative environment changes.
FAQ: Trump’s Executive Order on Digital Assets and CBDC Prohibition
- What is the purpose of Trump’s executive order on digital assets?
The executive order aims to establish a regulatory framework for digital assets, including cryptocurrencies and stablecoins. It also bans the creation of a Central Bank Digital Currency (CBDC) in the United States and sets up a working group to oversee the creation of a national digital asset reserve. - What does the executive order say about Central Bank Digital Currency (CBDC)?
The executive order officially prohibits the establishment, issuance, or promotion of a Central Bank Digital Currency (CBDC) in the U.S., both domestically and internationally, except as required by law. Any ongoing efforts related to CBDCs will be discontinued. - What is the role of the presidential working group established by the executive order?
The working group will be responsible for developing a federal regulatory framework for digital assets, including stablecoins. It will focus on key areas such as market structure, consumer protection, and risk management. The group will also evaluate the possibility of creating a national digital assets reserve. - What is a national digital assets reserve?
The national reserve refers to a potential stockpile of digital assets that the U.S. government could create. This reserve may focus primarily on Bitcoin seized by law enforcement agencies. The goal is to establish a strategic reserve of digital assets for the nation. - What is President Trump’s plan for Bitcoin in the U.S.?
President Trump has proposed creating a strategic national Bitcoin stockpile using Bitcoin seized by the government. The U.S. currently holds over 198,000 Bitcoin, worth more than $20 billion. Additionally, Senator Cynthia Lummis has introduced legislation to buy 200,000 Bitcoin annually for the next five years to reach a goal of 1,000,000 Bitcoin. - How does the executive order impact the cryptocurrency industry?
The executive order strengthens the U.S.’s position on digital assets by prohibiting CBDCs and promoting digital asset regulation. It could influence global cryptocurrency regulations and position the U.S. as a leading player in the digital asset market. - What other measures are included in Trump’s broader plan for digital assets?
Trump’s plan includes the creation of a Bitcoin reserve, the prohibition of CBDCs, and the formation of an advisory council for digital assets. Additionally, he has promised to pardon Ross Ulbricht, the founder of the Silk Road and a notable figure in the Bitcoin community. - Will other countries follow the U.S. in prohibiting CBDCs or creating Bitcoin reserves?
It remains to be seen whether other nations will adopt similar approaches to the U.S. in banning CBDCs or building national Bitcoin reserves. The U.S. executive order could set a precedent for other countries considering their own regulatory frameworks for digital assets.
