The Trump administration has taken its first steps to engage with the cryptocurrency sector, but significant regulatory clarity is still a long way off, according to investment bank TD Cowen.
TD Cowen: Trump’s Cryptocurrency Steps Are Symbolic, Tangible Contributions Are Years Away
Former President Donald Trump signed an executive order yesterday creating the Digital Asset Markets Working Group. The group’s goal is to identify and remove barriers to cryptocurrency innovation, taking a symbolic step for crypto in the United States.
“This is an easy task,” said Jaret Seiberg, head of the TD Cowen Washington Research Group, in a report published Friday. “Every President establishes commissions and task forces on important issues. It is symbolically important because it reflects how Team Trump is prioritizing crypto, but it is not the same as rule changes.”
Seiberg noted that creating the necessary regulatory framework for the crypto industry will take “years, not weeks,” as these processes typically involve rulemaking, public input, and potential legal challenges.
The working group’s responsibilities include assessing the feasibility of a national digital asset stockpile, but Trump refrained from creating a Bitcoin reserve, contrary to some expectations.
“Since Trump’s priority is the US dollar, we remain skeptical that countries could be at risk as a reserve currency if they turn to Bitcoin,” Seiberg said.
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Seiberg also noted that Trump’s support for a Bitcoin reserve would contradict his long-held belief in the superiority of the US dollar as the global reserve currency. “It seems unlikely that arguing that a Bitcoin reserve would be a safeguard to preserve the US role in the global economy would sway Trump,” he added.
In line with Trump’s executive order, the U.S. Securities and Exchange Commission (SEC) repealed Staff Accounting Bulletin No. 121 (SAB 121), which previously required banks holding cryptocurrencies for their clients to classify these assets as their liabilities.
This repeal allows banks to serve as crypto custodians without taking on the risk of classifying these assets as liabilities and was an expected move as it does not require a formal rulemaking process.
Additionally, the SEC recently launched a new crypto task force led by Commissioner Hester Peirce. The task force aims to develop a comprehensive framework for the industry, but Seiberg warned that meaningful action will take time.
“These rules could be challenged in court,” Seiberg explained, adding, “The sooner the SEC proposes these changes, the more time there will be for this process to be completed before the next presidential election.”
*This is not investment advice.
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