The new President administration intends to position the U.S. as a leader in the crypto sector, aiming to establish a strategic national digital asset stockpile, potentially comprising cryptocurrencies lawfully seized by the federal government.
On January 23, U.S. President Donald Trump signed an executive order establishing a working group to explore ways for the United States to lead in the cryptocurrency industry. One of the group’s main tasks is evaluating the creation of a strategic national digital assets stockpile.
In addition, the order bans “the creation, issuance, circulation, and use” of a U.S. central bank digital currency (CBDC). It also directs the working group to develop a regulatory framework for stablecoins.
Following the announcement, Bitcoin’s price experienced a decline, briefly dropping to $102,220. This downturn was partly due to market participants realising that the executive order did not immediately establish a Bitcoin-specific national reserve, as some had anticipated. The vague concept of ‘digital assets’ can include any popular cryptocurrencies, whether altcoins, stablecoins or even meme coins.
At the same time, the executive order description indicates that the working group might utilise cryptocurrencies seized through federal law enforcement efforts for the national digital asset stockpile. Therefore, the reserve can include over $20 billion worth of BTC earlier seized by the Justice Department, which comprises nearly 98% of the government’s crypto holdings. The other 2% are divided between around $182 million worth of ETH and millions of dollars in various altcoins. Thus, even if the stockpile will include a mix of cryptocurrencies, its vast majority will likely be in Bitcoin.
While the immediate market reaction was mixed, industry leaders still view the executive order as a significant step toward broader Bitcoin adoption and a shift in the regulatory landscape. The BTC price has since recovered to the price of $105,155.
Another positive news for the crypto industry in the U.S. is a more crypto-friendly stance within the SEC. On the same day with the executive order, the U.S. Securities and Exchange Commission (SEC) revoked Staff Accounting Bulletin 121 (SAB 121), a 2022 guideline that required financial institutions holding cryptocurrencies for clients to report these assets as liabilities on their balance sheets.
The new guidelines alleviate the burdens of increased compliance costs and administrative challenges for financial firms, potentially encouraging more institutions to offer crypto custody services. The banking sector supported the revocation, as it allows banks to serve as secure custodians for digital assets again. SEC Commissioner Hester Peirce, leading the agency’s crypto task force, also expressed approval of the decision, generally viewed as a positive development for the cryptocurrency industry, potentially leading to increased institutional participation and a more encouraging regulatory environment.
Under Joe Biden’s presidency, the SEC applied many stringent measures towards crypto-friendly companies, causing certain legislators to draft a bill requiring the commission to modify its rules and allow broker-dealers to custody digital assets. It argued that the existing crypto regulation guidelines not only stifle innovation but also fail to protect consumers willing to invest in innovative financial instruments such as crypto.
SEC’s position on stifling crypto projects was also repeatedly criticised by industry leaders and representatives of major crypto firms, which faced prosecution by the agency.
