Trump issues executive order banning creation of central bank digital currency, strengthens US stance on cryptocurrencies

Trump issues executive order banning creation of central bank digital currency, strengthens US stance on cryptocurrencies

Trump Signs Executive Order to Strengthen US Digital Asset Regulations and Bans CBDC Creation

Date: January 24, 2025 | Written by: FE Online

In a bold move signaling the US government’s commitment to shaping the future of digital financial technologies, President Donald Trump has signed a groundbreaking executive order titled “Strengthening American Leadership in Digital Financial Technology.” This order introduces several key directives aimed at reinforcing the United States' stance on cryptocurrencies, stablecoins, and digital asset regulations. Notably, the executive order includes a ban on the creation of a Central Bank Digital Currency (CBDC) within the US and sets up a framework for regulating digital assets, positioning the country as a leader in digital financial innovation.

Ban on Central Bank Digital Currency (CBDC)

A pivotal provision of the executive order is the official prohibition on the creation or issuance of a CBDC within the United States. The order defines CBDC as a "form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank." The order directs that, "except to the extent required by law," US agencies are prohibited from taking any action to establish, issue, or promote CBDCs, both domestically and abroad. This directive effectively halts any ongoing initiatives or plans to create a CBDC, marking a significant departure from potential central bank-backed digital currencies that have been under discussion worldwide.

Creation of a Federal Digital Assets Regulatory Framework

The executive order also establishes a presidential working group tasked with developing a comprehensive federal regulatory framework for digital assets, with a specific focus on cryptocurrencies, stablecoins, and other digital financial products. This group will be responsible for assessing various aspects of the digital asset market, including its structure, oversight mechanisms, consumer protection strategies, and risk management protocols. A key part of this effort will be the evaluation of establishing a national digital assets stockpile, with a special emphasis on cryptocurrencies seized by federal law enforcement.

In line with President Trump’s previous statements about the importance of Bitcoin to the US economy, the working group’s mandate could extend to managing a national Bitcoin reserve. As of the latest data from Arkham Intelligence, the US government currently holds 198,109 Bitcoin, worth more than $20.1 billion. This stockpile is largely comprised of Bitcoin seized during law enforcement operations and could play a crucial role in the country’s long-term digital asset strategy.

The Potential Impact of the Executive Order on the Crypto Industry

This executive order signals a marked shift in US policy towards digital assets and stablecoins, providing clarity on the federal government's regulatory intentions. By banning the creation of a CBDC, the Trump administration strengthens its position against central bank-backed digital currencies, which have been gaining traction in other parts of the world. The formation of the working group will likely lead to tighter regulations surrounding the digital asset market, with an emphasis on consumer protection and market stability.

Moreover, the establishment of a national digital asset stockpile, particularly focusing on Bitcoin, could signal the US's commitment to solidifying its position as a global leader in digital financial technology. If successful, this initiative may offer a model for other countries to follow, balancing innovation with regulatory oversight in the rapidly evolving cryptocurrency space.

Conclusion

President Trump's executive order represents a decisive step toward a more structured and regulated approach to digital assets in the United States. While it effectively bans the creation of a CBDC, it also opens the door for further federal action to manage and secure the growing digital asset landscape. The creation of a federal regulatory framework and the potential establishment of a national Bitcoin stockpile mark important milestones in the US’s evolving digital asset policy. As the industry moves forward, the US government’s stance will play a significant role in shaping the future of cryptocurrencies and digital financial technologies worldwide.