top of page

History in the Making: The Crypto Executive Order

Updated: Jan 28


Intro Disclaimer: Any views expressed in this blog are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions. The author of this content may hold personal investments in the assets, securities, or instruments mentioned within this material. This ownership could potentially create a conflict of interest, as the author's opinions may be influenced by their investment position. Readers should not interpret this information as financial advice and are encouraged to conduct their own research. Investing in cryptocurrencies involves significant risk and may not be suitable for all investors. The value of cryptocurrencies is highly volatile and can fluctuate widely in response to market dynamics, regulatory actions, technological developments, and other external factors.


Introduction


The freedom to transact across permissionless public blockchain networks, which improve transparency, increase transaction speeds, and eliminate censorship, should be a priority of the U.S. government and a bipartisan objective.


Unfortunately, it doesn’t take a rocket scientist to recognize the past 4 years have been incredibly challenging for developers, advocates, and users of blockchain technology and cryptocurrency in the U.S., as the subject has become increasingly politicized.


Thankfully, the days of Operation Chokepoint 2.0 across the crypto sector are numbered, and will soon be a memory of the past.


On January 23, 2025, the Securities and Exchange Commission revoked Staff Accounting Bulletin 121, a highly arbitrary rule that prevented financial institutions from offering crypto solutions to clients.


That same day, newly inaugurated President, Donald Trump, issued an executive order that aimed at promoting U.S. leadership in digital assets and financial technology, while also addressing concerns about economic liberty.


The Executive Order OUTLINES 3 KEY IMPLICATIONS


1) Revocation of Prior Crypto Executive Framework

2) Establishment of Crypto Working Group

3) Abolishment of Central Banking Digital Currency (CBDC)


  1. Revocation of Prior Crypto Executive Order and Treasury Framework


In hindsight, Biden's 2022 Executive Order titled, 'Ensuring Responsible Development of Digital Assets', and the Treasury Department's fact sheet, 'Framework for International Engagement on Digital Assets', were the telling mirrors on the wall. Crypto frameworks that received little attention, but foreshadowed the previous administration's oppressive regulatory approach over blockchain and digital assets in the U.S.


Some of these initiatives raised concerns and have since been dismissed or abolished under the new Executive Order. Key priorities in the prior administration's framework included:


A) Exploring the potential implementation of a Central Bank Digital Currency (CBDC)

B) Strengthening consumer protections, mitigating illicit activity, and safeguarding U.S. financial stability through existing regulatory structures

C) Addressing the environmental impact of cryptocurrency mining


A) CBDC - While CBDCs appear as simple digital versions of a national currency, they could lead to greater government surveillance of individuals' financial transactions and transaction history. A logical compromise would be to support U.S. denominated stablecoins, which drive demand for U.S. treasuries and promote American dominance within international markets; formalized stablecoin legislation is currently pending in Congress and would require presidential approval, if passed.


Note: With over $200 billion in public supply, stablecoins have become a top 20 holder of U.S. debt. According to A16Z Crypto, US-Dollar denominated stablecoins currently dominate the fiat blockchain market with 99% market share.


B) Illicit Activity - Crypto is wrongly conveyed as a tool for illicit activity; studies from Chainalysis estimate that 0.14% of total on-chain transaction volume in 2024 was illicit, or ~$41 billion.


The irony is that using blockchain is actually a HORRIBLE way for criminals to transact, due to its pseudo-anonymous structure and traceability. Do recall, all public blockchain transactions are recorded and tracked on an open, distributed ledger. So if you're trying to avoid creating a paper trail, it's probably best NOT to use a public blockchain. Given the insignificance at just 0.14% of total volume, this no longer appears to be a core focus area under the new administration.


C) Environmental Impact - Technology is objectively speaking, energy intensive; take the training and inference of artificial intelligence models, which requires significant computing capacity, and in turn, power. Scapegoating cryptocurrencies for issues of "climate change and pollution" is both satirical and disingenuous. With an estimated ~60% of mining driven by renewable energy sources, Bitcoin is far ahead of its computing peers (source: Bitcoin Mining Council).


Let's continue to advance technology, not suppress it, and find ways to power its growth sustainably and efficiently.


  1. Establishment of Crypto Working Group


The new executive order establishes a Crypto Working Group with two main objectives:


A) Providing regulatory clarity to promote innovation and growth in the crypto sector

B) Creating a U.S. crypto reserve to build a stockpile of essential digital assets


Members of the Crypto Working Group:


A) Regulatory Clarity - Within 30 days of the Executive Order, the Working Group must identify all outstanding legislation, regulation, and guidance that affects the U.S. crypto sector.


Within 60 days, each official must submit recommendations to David Sacks (chair) on whether such regulation should be amended, rescinded, or maintained.


Within 180 days, the Working Group must submit a report to Donald Trump that includes proposed legislation and an outlined regulatory approach for crypto.


And in conclusion? A full-scale Federal regulatory framework for both the issuance and operation of digital assets with market structure, oversight, consumer protection, and risk management fully considered.


B) U.S. Crypto Stockpile - There was considerable speculation that a strategic Bitcoin (BTC) Reserve would be installed on Day 1 of Trump's administration. Many were dejected to learn this was nothing more than, speculation, while others rejoiced at the possibility of the U.S. adding more than just BTC to a potential stockpile.


My anticipation is that the stockpile will contain more than just BTC, and instead, select digital assets vital to the crypto sector, such as Ethereum (ETH) and Solana (SOL), in addition to U.S-based projects, such as XRP (Ripple), Avalanche (AVAX), and Chainlink (LINK).


The crypto community patiently awaits more details on the proposed criteria for inclusion.


  1. Abolishment of CBDC


The Executive Order lastly addresses the risks posed by CBDCs and explicitly prohibits U.S. agencies from pursuing actions to establish, issue, or promote CBDCs either domestically or internationally.


Any potential plans to create a CBDC within the U.S. are to be immediately halted. For the foreseeable future, you can take the chances of an American-issued CBDC off the table.


__________________________________________

Boomer Saraga | Crypto Investment Manager 


 

 

 


Closing Disclaimer: This blog is for informational purposes only. While the information provided herein is believed to be accurate and reliable, none of Khelp, or any of their respective affiliates or representatives or any other person makes any representations or warranties, express or implied, as to the accuracy or completeness of such information.


Comments


bottom of page