Crypto Assets under the Trump Administration
Crypto Assets under the Trump Administration
- The document outlines Trump's crypto-friendly stance and the issuance of an executive order to promote digital asset leadership.
- It examines potential shifts in regulatory approaches by the SEC, CFTC and other agencies under the Trump administration, including key personnel like Paul Atkins and Caroline Pham.
- The document discusses the current status of key regulatory issues, including stablecoins, registered investment advisers, and crypto ETFs, with an outlook on potential changes.
- Focus is given to AML compliance, key legislation like the BITCOIN Act of 2024, and FIT21, with a review of state-level regimes and potential adjustments under a new administration.
Crypto Assets under the Trump Administration
@financepresentations5 days ago
Crypto Assets under the Trump Administration
February 3, 2025
Debevoise & Plimpton
65.32
12/14
01 55.
- Introduction 3
- SEC 8
- CFTC 19
- Banking Regulators 24
- BSA/AML & Sanctions 34
- Legislation 38
- State-Level Regimes 51
- · Establishing a working group of relevant agency heads led by the new 'crypto czar';
- · Directing federal agencies to identify relevant existing regulations and assess whether they should be rescinded or modified; and
- · Setting a timeline for recommending legislative and regulatory reforms to create a comprehensive federal regulatory framework.
- · Addressing the key barriers in the United States will likely require significant new legislation, substantial regulatory work by the Securities and Exchange Commission ('SEC'), Commodities Futures Trading Commission ('CFTC') and bank regulators and development of other sup porting legal regimes, such as state commercial law, tax law and others.
- · 30 Days -Within 30 days of the date of the Executive Order (by February 22, 2025), agency heads, including the Department of Justice ( 'DOJ'), SEC and U.S. Department of Treasury ('Treasury'), must 'identify all regulations, guidance documents, orders, or other items that affect the digital asset sector.'
- · 60 Days -Within 60 days of the date of the Executive Order (by March 24, 2025), each agency that is included in the Working Group must 'submit to the Chair recommendations with respect to whether each identified regulation, guidance document, order, or other item should be rescinded, modified, or for items other than regulations adopted in a regulation.'
- · 180 Days - Within 180 days of the date of the Executive Order (by July 22, 2025), the Working Group must 'submit a report to the Preside n t ⦠which shall recommend regulatory and legislative proposals that advance the policies established' in the Executive Order. The Order details the contents of the report.
- · Classifications of crypto-assets (e.g., security, commodity, currency).
- · Application of the current SEC regulatory regime to the issuance and intermediation of cryptoassets, including stablecoins (e.g., securities offering requirements, Rule 15c3-3, regulations promulgated under the Investment Advisers Act of 1940 ('Investment Advisers Act')).
- · Absence of a comprehensive regulatory regime for nonsecurities crypto-assets.
- · Preemption of state regimes (e.g., state regulation of cryptoassets and money transmission laws).
- · Limited SEC exemptions to permit (1) creation of crypto-asset brokerages and (2) broker-dealer custody.
- · Staff Accounting Bulletin No. 121 ('SAB 121') accounting treatment of crypto custody (rescinded on January 23, 2025).
- · Historical uncertainty around banking regulator approach to safety and soundness.
- · Continued uncertainty around legal permissibility of bank crypto-asset activities.
- · Bank Secrecy Act ('BSA')/Anti -Money Laundering ('AML') and Office of Foreign Assets Control ('OFAC') sanctions compliance.
- · Interaction between federal legislation/regulation and state legislation/regulation.
- · Uncertain status of crypto-assets as property under state law (adoption of UCC Article 12).
Table of Contents
Introduction -Trump Administration Approach
While President Trump was skeptical of digital assets during his first term, candidate Trump 2.0 positioned himself as an ally of the crypto-asset industry and was backed by a number of high-profile crypto advocates, such as Marc Andreessen, Elon Musk, Peter Thiel, and Tyler and Cameron Winklevoss.
Trump stated that he has 'a plan to ensure the United States will be the crypto capital of the planet and the Bitcoin superpower of the world.'
On January 23, Trump issued an Executive Order titled 'Strengthening American Leadership in Digital Financial Technology.'
This deck summarizes current regulatory stances and legislative proposals on crypto-assets 1 and previews the likely regulatory agendas for Trump administration appointees.
This Executive Order signals a sharp shift away from the Biden administration's approach to the crypto -asset industry, which many labeled regulation by enforcement. The Executive Order aims to establish federal policy that promotes the 'responsible growth and use of digita l assets, blockchain technology, and related technologies across all sectors of the economy' and to achieve 'regulatory clarity and certainty.' I t also seeks to support the development of USD-backed stablecoins worldwide, and fair and open access to crypto-related banking services.
The Executive Order mandates regulatory coordination to provide a path for crypto industry development by:
Conversely, the order prohibits any work to advance a Central Bank Digital Currency.
For additional details on the Executive Order, please refer to our client alert entitled 'Trump Executive Order Establishes F ederal Policy Supporting Digital Assets, Setting a Path Toward a Crypto Regulatory Framework,' available here.
1 We use the term 'crypto assets' to encompass cryptocurrency, virtual currency and digital assets, unless specified otherwise in -an order, guidance or proposed legislation, where different terminology may apply.
Introduction -Trump Administration Approach
Developing and implementing regulatory fixes to facilitate a dynamic industry will not happen overnight.
While we expect early regulatory efforts to create greater clarity on crypto-asset characterization, applicability of SEC requirements and permissible banking activities, we expect the formation of the new regulatory regime necessary to substantially open up the space to be a multiyear project.
Ambitiously, Trump's Executive Order sets a 180 -day timeline for the Working Group to deliver recommended legislative and regulatory proposals.
Timeline Provided by Trump's Executive Order
