US President Donald Trump’s evolving stance on cryptocurrencies — from scepticism in his first term to a pro-innovation approach in his second — has sparked significant debate about the future of the crypto industry.
In 2019, he publicly expressed doubts about Bitcoin and other cryptocurrencies, famously tweeting that he was “not a fan”. At the time, he questioned their fundamental value, arguing they are “not money” and their worth is based “on thin air”.
He also raised concerns about their potential use in illegal activities like drug trafficking. These views underlined his administration’s regulatory approach, which prioritised strict oversight of the cryptocurrency industry and aimed to curb illicit use.
Recognising the growing importance of digital assets and their potential to drive innovation, famously unpredictable Trump began to embrace a more supportive posture during his campaign for a second term. This shift culminated in January when Trump signed an executive order that could have a profound impact on the cryptocurrency landscape.
The order aimed to foster innovation within the crypto sector, promising clearer regulatory frameworks and strongly signalling that the administration viewed crypto as a top priority.
This marked a stark departure from his earlier scepticism and reflected a broader recognition of the transformative potential of digital assets in the global economy.
New US policies to promote innovation in crypto
The SEC Crypto 2.0 task force, launched by Acting Chair Mark Uyeda on Jan 21, marks a significant shift in US cryptocurrency regulation. Under former US Securities and Exchange Commission Chair Gary Gensler, the agency was criticised for stifling innovation through aggressive enforcement actions, which many argued hindered the growth of the digital asset class.
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In contrast, the new task force aims to create a comprehensive regulatory framework for crypto assets, with objectives including clear regulatory lines, realistic paths to registration, sensible disclosure requirements and judicious enforcement. It will also explore the creation of a strategic national digital asset reserve, signalling a proactive approach to integrating digital assets into the financial system.
One of the task force’s first actions was repealing the controversial SAB 121, a 2022 SEC guideline that required companies holding cryptocurrencies for customers to report these assets as liabilities on their balance sheets. This rule was widely seen as a barrier to crypto adoption, as it imposed heavy burdens on businesses. Its repeal underscores the task force’s commitment to fostering innovation.
However, critics warn that without proper oversight, the crypto market could become a breeding ground for speculative bubbles and financial crimes, highlighting the need to balance growth with market integrity.
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The SEC Crypto 2.0 initiative was further reinforced on Jan 23, when Trump signed an executive order establishing the Presidential Working Group on Digital Asset Markets. Led by White House’s crypto and artificial intelligence czar David Sacks, the group includes top officials from the Treasury, Commerce, Homeland Security, the Attorney General, and the chairs of the SEC and Commodity Futures Trading Commission.
With initial findings due in 30 days and a final report in 180 days, the group aims to create a structured and supportive environment for digital assets, marking a clear departure from the previous administration’s approach.
The executive order also revoked former President Joe Biden’s Executive Order 14067 and the Treasury’s 2022 “Framework for International Engagement on Digital Assets”, which were seen as undermining the crypto industry. The Biden administration had taken a hardline stance, suing dozens of crypto exchanges to combat fraud and money laundering. While these goals were important, critics argued that the aggressive tactics stifled innovation. The new order focuses on fostering growth and innovation while addressing risks like fraud.
The CBDC debate: A radical departure
A key aspect of the order is its explicit prohibition on federal agencies promoting or implementing Central Bank Digital Currencies (CBDCs) — a digital form of a country’s official currency issued and regulated by its central bank. Unlike decentralised cryptocurrencies like Bitcoin, CBDCs are fully government-controlled. Proponents argue they can modernise financial systems, improve payment efficiency and expand access to banking.
However, critics warn they could threaten privacy and freedom, as governments could track transactions or freeze accounts. CBDCs could potentially lead to bank runs during economic crises, as people may choose to move funds from private banks to less risky CBDC. By rejecting CBDCs, the US signals a preference for decentralised cryptocurrencies, granting them greater legitimacy and encouraging adoption.
This stance contrasts sharply with other countries actively pursuing CBDCs. China, for example, has launched pilot programmes for its digital yuan across multiple provinces. Singapore is preparing for a potential digital Singapore dollar, with its Monetary Authority building the necessary infrastructure. Even the traditionally sceptical European Central Bank is developing a digital euro to complement cash and enhance payment efficiency. Japan and India have also accelerated CBDC research, fearing exclusion from a potential global digital currency race.
This divergence highlights a fundamental global debate: Should digital money be centralised and government-controlled, or decentralised and independent? While many countries see CBDCs as a way to modernise financial systems, the US is prioritising decentralised cryptocurrencies. By fostering an open, innovation-friendly environment, the US is positioning itself as a leader in the decentralised digital economy.
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Deregulation and controversies
Trump’s early executive actions repealed several regulations discouraging banks from holding Bitcoin and other cryptocurrencies, while promoting a crypto ecosystem conducive to institutional involvement.
Banks were directed to re-establish relationships with cryptocurrency companies to integrate cryptocurrency businesses with the traditional financial system, ending practices that had hindered the industry. Additionally, individuals were allowed to self-custody their digital assets, and a Digital Assets Committee was established to oversee the sector.
The administration also announced plans for a Strategic Reserve focused on cryptocurrencies, with some speculating that the US could accumulate Bitcoin and other digital assets as a digital alternative to gold reserves. As of January, the US government holds more than 200,000 Bitcoins (valued at almost U$20 billion ($26.8 billion)) accumulated from seizures related to Silk Road, the Bitfinex hack and other cases.
In a more controversial move, Trump pardoned Ross Ulbricht, the infamous founder of Silk Road. While some view Ulbricht as a pioneer in digital marketplaces, others see his actions as a cautionary tale about the darker applications of unregulated crypto. His pardon has reignited debates about internet freedom, the ethics of cryptocurrency use and the legal boundaries of online marketplaces.
In an even more polarising development, Trump launched Trump Coin, a meme cryptocurrency, just days before his inauguration. The coin faced criticism for its speculative nature, lack of utility and potential for misuse. Its highly volatile value, driven by market sentiment rather than economic fundamentals, has raised concerns about its destabilising effect on the crypto industry.
While Trump’s policy actions have been largely promising for the sector, his personal ventures in memecoins question incentives behind his policy actions.
Uncertain implications for the global crypto landscape
Trump’s latest executive actions may have redefined the US position in the global cryptocurrency and decentralised finance ecosystem. By fostering innovation, promising clear regulatory frameworks and promoting institutional engagement — while shunning government-controlled digital currencies — the US is positioning itself as a leader in the decentralised digital economy.
The early days of Trump’s second term have seen rapid developments in the cryptocurrency industry. These initiatives have the potential to reshape the domestic crypto landscape and set the stage for a global revolution in digital assets.
However, the long-term impact remains uncertain. Deregulation could spur growth, but it also risks speculative bubbles, financial crimes and instability, echoing the dangers of the 2008 financial crisis.
The US’s rejection of CBDCs sets it apart from China and Singapore, raising questions about its ability to compete in the digital finance race.
As the industry evolves, the future hinges on whether innovation can outpace the risks of this still-maturing market.
Emir Hrjnic is academic director of the UCLA-NUS Executive MBA (EMBA) and a senior lecturer in the Department of Finance at the National University of Singapore Business School
