As digital currencies make breakthroughs across the globe, President Donald J. Trump is aiming to position the United States at the forefront of this financial renaissance.
Back in July of 2024, Trump gave the keynote address at Bitcoin 2024, the largest Bitcoin conference in the world. Since then, Trump himself has dabbled in the crypto industry, launching two sets of “Trump Digital Trading Cards,” most notably the “Mugshot Edition.” Additionally, he launched his very own meme token just days before taking the oath of office. With promises of pro-crypto policy on the campaign trail, such as removing capital gains taxes on US based crypto projects, investors around the globe are closely watching his every move.
Almost immediately, President Trump began fulfilling his crypto based promises, signing an executive order titled, “Strengthening American Leadership in Digital Financial Technology.” This order prohibits the United States from developing, issuing, or using a central bank digital currency, or CBDC.
A CBDC is a digital version of a country’s money that is created and controlled by the government’s central bank. The creation of a CBDC in the United States has sparked debate among economists, crypto enthusiasts, and politicians.
Those in favor of the creation of a CBDC in the United States, such as the International Monetary Fund (IMF), commonly argue that it is within the United States’ best interest to shift to a model in which transactions can be settled securely and instantly for fractions of a penny: a system that would prevail over expensive credit card fees and slow wire transfers. Those pushing for a CBDC believe that it will make payments easier, faster and safer.
Others, however, such as Nicholas Anthony, a policy analyst at the Cato Institute, cite privacy concerns, such as the fact that the contents of every account and its entire transaction history could be public for the world to see, a feature of blockchain technology that is sometimes used in CBDCs. Although the government would have access to such a transaction network, whether or not the public could view it would depend on how the CBDC is designed. Additionally, a CBDC could give the issuing body the ability to remotely access clients accounts, potentially allowing a government to set expiration dates on a user’s money, or freeze their access to their account entirely. Opinions such as Anthony’s align with President Trump, who took it upon himself to ban a CBDC entirely on his second day in office, even though one does not currently exist in the USA.
Many crypto projects are built around offering CBDC solutions to governments around the world, and some countries, such as China, are in the development stage of a CBDC of their own. So this executive order likely harmed certain projects in the crypto market. However, this was not Trump’s only action regarding crypto markets.
The very same executive action that banned CBDC’s established a body to evaluate the potential benefits of a “National Digital Asset Stockpile.” This means that the US government will look into putting together a fund of various cryptocurrencies to enhance both economic stability and national security. It is assumed that much of this potential fund will be assets seized by the FBI and held by the US Government from the “Silk Road,” a platform that facilitated the sale of illegal drugs using Bitcoin from 2011 to 2013.
President Trump’s interest in a digital asset stockpile signals a key turning point in the United States perception of crypto and proves to the world that the US government finally sees value in this technology. Trump’s order, however, faced severe criticism from the crypto community. This came specifically from “Bitcoin Maxis,” those in the crypto space who believe that bitcoin is the only cryptocurrency with real value. These Bitcoin Maxis had hoped for the passing of the BITCOIN Act of 2024, a bill proposed last year by Senator Cynthia Lummins (R-Wyoming), which would establish a Bitcoin Strategic Reserve. The key difference between this and Trump’s executive order is that his asset stockpile would contain other cryptocurrencies, not just Bitcoin, while the Bitcoin Act of 2024 outlines a plan for the United States to purchase 200,000 Bitcoins per year for 5 years.
For the rest of the crypto space, these executive actions taken by President Trump were a huge victory. While it is still unknown if the United States will implement a Digital Asset Stockpile, or what the future holds for crypto’s role in the United States Government, it is clear that the role of crypto is a priority for the current administration.
