Key developments in crypto regulation in the US during Trump’s first week
The initial week of the Trump administration witnessed significant advancements in the regulation of crypto within the United States. The U.S. Securities and Exchange Commission (SEC) launched a fresh initiative known as the “Crypto Task Force,” retracted contentious staff accounting guidance concerning crypto custody, and released updated guidelines on the same subject matter. Additionally, President Trump executed an executive decree promising a thorough reassessment of U.S. crypto regulation.
During his time on the campaign trail, President Trump introduced a notable shift in the approach to crypto regulation in comparison to the prior Biden administration. The occurrences of the inaugural week of Trump’s administration indicate a favorable stance towards crypto. Acting SEC Chair Mark Uyeda initiated a crypto task force on January 21, with a specific focus on clarifying the regulatory landscape around crypto assets. Furthermore, the SEC invalidated Staff Accounting Bulletin No. 121 (SAB 121) and replaced it with the amended Staff Accounting Bulletin No. 122 (SAB 122) on January 23. SAB 121 mandated entities safeguarding crypto assets for clients to depict a liability on their balance sheets to mirror their obligation to safeguard the assets.
On the same day, President Trump issued an executive order to establish a clear regulatory framework for digital financial technology, establishing a “Presidential Working Group on Digital Asset Markets” to review current regulations applicable to crypto assets and prohibiting federal agencies from endorsing or backing central bank digital currencies (CBDCs). The SEC’s Crypto Task Force focuses on creating a comprehensive regulatory outline for crypto assets, led by Commissioner Hester Peirce. The primary objective is to identify clear regulatory boundaries, facilitate practical paths for registration, lay down disclosure guidelines, and employ enforcement resources in a judicious manner. Moreover, the task force is set to coordinate with Congress and other federal and international entities, such as the Commodity Futures Trading Commission.
Following the formation of the task force, the SEC rescinded SAB 121 and issued the updated SAB 122 in its place. The original bulletin required custodians to include custodied crypto assets on their balance sheets, contrary to traditional accounting practices. However, SAB 122 revised this requirement, allowing entities the flexibility to treat crypto assets based on specific accounting standards. Additionally, President Trump’s executive order aims to bring regulatory clarity to the crypto sector through the establishment of the “Presidential Working Group on Digital Asset Markets.” This group would examine existing regulations affecting the crypto industry and make recommendations on rescinding, modifying, or adopting new regulations.
The executive order also prevents federal agencies from promoting CBDCs while defining digital assets broadly as any digital representation of value recorded on a distributed ledger. This definition extends beyond native crypto assets like Bitcoin and Ether to potentially encompass traditional financial assets if recorded on a blockchain. The order further tasks the Working Group with proposing a federal regulatory framework for digital assets and evaluating the feasibility of creating a national crypto asset reserve. The comprehensive re-examination of U.S. crypto regulation under the Trump administration showcases a proactive approach to fostering innovation and ensuring clarity in the ever-evolving crypto landscape.
