Crypto Executive Order

Many of the top crypto entrepreneurs are Americans, but many have had to leave because of regulatory uncertainty. This administration is taking the opportunity to reverse this trend and make the US a leader that invites crypto innovation.

The highly anticipated Crypto Executive Order was signed on Jan 23rd. In my last blog I touched on predictions on changes to crypto policy. Some have already come to fruition while even more promising decisions have been made. Let’s go through some of them.

Implemented Policy

On his very first day in office, Trump signed 26 executive orders. In his first term, he signed just 33 orders in his first 100 days. Since executive orders do not require Congress approval and stand until possibly being struck down by federal courts, they have become efficient ways to enact rules, no matter how far-reaching.

The two executive orders related to crypto are:

• Strengthening American Leadership in Digital Financial Technology:
• President’s Council of Advisors on Science and Technology

SAB 121 was rescinded by SAB 122. SAB 121 directed banks to count customers’ crypto assets on their own balance sheets, treating crypto as a liability. Now, crypto is to be counted according to the Financial Accounting Standards Board rules.

Senate Banking Committee Chair Tim Scott named Senator Cynthia Lummis as the chair of the new Senate panel focused on digital assets. This panel’s focus is two fold:

1. “Passing bipartisan digital asset legislation that promotes responsible innovation and protects consumers, including market structure, stablecoins and a strategic bitcoin reserve.”
2. “Conducting robust oversight over Federal financial regulators to ensure those agencies are following the law, including by ensuring Operation Chokepoint 2.0 never happens again.”

Travis Hill also became the Acting Chairman of the Federal Deposit Insurance Corporation (FDIC). The statement lists the following focuses:

• “Improve the bank merger approval process and replace the 2024 Statement of Policy to ensure that merger transactions that satisfy the Bank Merger Act are approved in a timely way.”
• “Encourage more de novo activity so there is a healthy pipeline of new entrants in the banking sector.”
• “Adopt a more open-minded approach to innovation and technology adoption, including (1) a more transparent approach to fintech partnerships and to digital assets and tokenization,”

The SEC acting chairman Mark T. Uyeda also announced a new crypto task force led by Commissioner Hester Peirce and supported by Richard Gabbert and Taylor Asher. The department acknowledged that the SEC has “relied primarily on enforcement actions to regulate crypto retroactively” which “creates an environment hostile to innovation and conducive to fraud.” This task force is to help the SEC “draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.”

The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud. The SEC can do better.

Ross Ulbricht (Silk Road founder) was also pardoned, as Trump had promised.

Future Opportunities

Many of the changes stated earlier are frameworks for work to be done. Here are some possibilities:

• SAB 122:
• FDIC banking acquisition focus:
• Crypto Working Group:
• SEC Crypto Task force:

Some future frameworks that have yet to be announced.

• Tax considerations:
• Master accounts:
• Crypto Working Group:

Optimism

I am very optimistic that NOW is the big unlock crypto has been waiting for, which will supercharge user growth and bring crypto to the masses. The strength of the crypto voter in November shows that crypto is important to people and the administration is finally listening.

There are now the proper regulatory teams with supportive mandates in place, like the Presidential Exec Order providing resources to understand crypto, the SEC’s crypto task force, SAB 122, and the Crypto Working Group (led by the Crypto Tzar). I’m looking forward to the Crypto Working group’s regulatory and legislative recommendations being completed within the first 180 days.

I am excited to navigate a world where we can operate with more regulatory clarity. Looking forward to what we can all build and accomplish together in the coming years.

Paul Veradittakit