Daniel Walker
The administration of Donald Trump has made an initial move to support the cryptocurrency sector, but true regulatory clarity will take significantly longer, according to a report by investment bank TD Cowen.
On Thursday, President Trump signed an executive order creating the Working Group on Digital Asset Markets. The groupโs mission is to identify and eliminate barriers hindering innovation in the crypto industry.
โThis is just the beginning,โ the Washington Research Group at TD Cowen, led by Jaret Seiberg, stated in a note on Friday. โPresidents often establish commissions and task forces on key issues. While this signals that the Trump administration sees crypto as a priority, it doesnโt equate to immediate rule changes.โ
Seiberg emphasized that crafting the necessary regulatory framework for the cryptocurrency sector will take years rather than weeks.
Debate Over a National Bitcoin Reserve
One aspect of the executive order tasks the working group with assessing the feasibility of a national digital asset stockpile, though it stops short of creating a Bitcoin reserve, a move some had speculated.
โWe doubt the administration will prioritize a Bitcoin reserve,โ Seiberg remarked. โPresident Donald Trumpโs focus remains on safeguarding the U.S. dollar as the global reserve currency. Turning to Bitcoin could undermine that position.โ
Last month, Seiberg reiterated that a Bitcoin reserve doesnโt align with Donald Trumpโs broader strategy. He stated, โTrumpโs belief in the U.S. dollarโs strength as a reserve currency makes it unlikely that he would advocate for a Bitcoin reserve. Positioning Bitcoin as a hedge for the U.S. economy seems unlikely to resonate with this administration.โ
Repeal of SEC’s SAB 121: Implications for Banks
In addition to Trumpโs executive order, the U.S. Securities and Exchange Commission (SEC) on Thursday repealed Staff Accounting Bulletin No. 121 (SAB 121). This bulletin previously required banks holding cryptocurrencies on behalf of customers to classify those assets as liabilities on their balance sheets.
Seiberg noted that this repeal was expected, as it could be implemented without a formal rulemaking process. The change now enables banks to act as crypto custodians, opening new avenues for financial institutions to participate in the digital asset market.
Formation of the SECโs Crypto Task Force
The SEC has also introduced a new crypto task force, led by Commissioner Hester Peirce, to establish a cohesive regulatory framework for the industry. Peirce, often referred to as โCrypto Momโ for her advocacy of blockchain and cryptocurrencies, is serving until June, though commissioners can remain in their roles for up to 18 months if not replaced.
Seiberg highlighted that the task force is a critical first step, but the true challenge lies in formalizing regulatory proposals. These proposals will need to undergo notice and comment periods, during which they could face legal challenges.
โThe sooner the SEC introduces these proposals, the more time there will be for the process to conclude before the next presidential election,โ Seiberg added. โThe agencyโs recent actions show an understanding of the urgency required.โ
