Digital Asset-Friendly Policy Changes Attract Cryptocurrency Innovation Back Onshore in the US

In just the first week of his second term, President Trump set the stage for a significant shift in the digital asset landscape of the United States. Key executive and regulatory actions were introduced, paving the way for easier institutional investment into cryptocurrencies and reducing compliance burdens.

Executive Order: Strengthening American Leadership in Digital Financial Technology

On January 23, 2025, President Trump signed the executive order “Strengthening American Leadership in Digital Financial Technology,” a landmark decision for the digital asset industry in the US. This order was instrumental in defining a clear regulatory framework for digital financial technologies.

At the World Economic Forum in Davos, Switzerland, President Trump voiced his commitment to making America a leader in emerging technologies, including cryptocurrency. Leveraging the country’s vast natural resources, he outlined plans to position the U.S. as a “global hub for AI and crypto.”

The President’s Digital Asset Legacy

In July 2024, President Trump’s support for digital assets gained momentum at the Bitcoin 2024 conference in Nashville, Tennessee. There, he delivered a passionate speech that resonated with Bitcoin enthusiasts, touching on topics such as a Strategic Bitcoin Reserve and the release of imprisoned Ross Ulbricht.

While estimates vary, up to 20 million Americans might own cryptocurrency. Although often associated with a Libertarian audience, recent studies show no clear correlation between Bitcoin ownership and political leanings.

The executive order reflects a blend of Libertarian and Conservative ideologies. It ensures individuals and businesses can access and use open public blockchain networks to develop software, engage in mining, and maintain control of their digital assets without undue fear of persecution.

The Role of Stablecoins

The endorsement of dollar-backed stablecoins is another critical aspect of the order. Stablecoins, particularly those backed by USD, have grown significantly. In January 2023, they represented almost 99% of the total stablecoin market, valued at $138 billion. Today, the market cap has ballooned to nearly $222 billion.

Stablecoins are poised to become significant holders of US Treasuries, rivaling nations like Brazil. According to a US Treasury report in October 2024, there is increased demand for short-term Treasuries from stablecoin issuers. A recent OKG forecast predicts the stablecoin market could surpass $400 billion by 2025, further supporting Treasury demand.

The executive order prohibits CBDC development within the U.S., reinforcing a preference for decentralized digital assets over centralized cryptocurrencies.

Rescission of SAB 121: A Breakthrough

Another pivotal development was the SEC’s rescission of Staff Accounting Bulletin No. 121 (SAB 121). Issued in 2022, SAB 121 mandated that institutions holding cryptocurrencies for clients classify these assets as liabilities. This directive caused significant compliance costs and made it difficult for banks to integrate digital assets into their offerings.

By rescinding SAB 121 and introducing SAB 122, the SEC provided more flexibility for financial institutions. The new bulletin allows companies to use broader accounting standards to assess their obligations regarding client assets and losses. This change has reduced compliance burdens and encourages banks to offer crypto custody services.

SAB 122 now aligns with standards from the Financial Accounting Standards Board (FASB) and International Accounting Standards Board, making it more appealing for financial institutions to enter the digital asset space.

Path Forward for Digital Assets

Together, these policy changes provide a clear roadmap for institutional investment into digital assets. By removing regulatory uncertainties and reducing compliance burdens, the Trump Administration is fostering a conducive environment for digital asset development in the US.

These actions will enable the establishment of a robust digital asset infrastructure, similar to what institutional investors are accustomed to in other markets. innovation in cryptocurrencies is unstoppable, and these policies ensure that the U.S. remains at the forefront.

However, more work is needed to fully integrate institutional participation, requiring continued regulatory support and clarity.

Overall, these developments underscore the Trump Administration’s commitment to digital asset innovation and its potential to transform the financial landscape in the United States.

Stay tuned for more updates on the evolving digital asset regulations and their impact on the industry.

What’s Next?

As the regulatory landscape continues to evolve, the future of digital assets in the United States looks promising. The Trump Administration’s actions have laid a foundation for institutional investment and technological innovation.

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