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President Trump executed a series of Executive Orders (EOs) in the first few days of his presidency to advance United States leadership in digital assets, focusing on reversing harmful policies then establishing effective ones.

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One EO, “Strengthening American Leadership in Digital Financial Technology” (Digital EO) revokes former President Biden’s prior EO on digital assets and marks a 180-degree turn from the prior administration’s approach, announcing that the “digital asset industry plays a crucial role in innovation and economic development in the United States, as well as our Nation’s international leadership.”

The Digital EO (a) protects the lawful use and development of blockchain from persecution, (b) promotes dollar-backed stablecoins worldwide as a means of protecting the sovereignty of the U.S. dollar, (c) prohibits the development of central bank digital currency (CBDC), (d) ends debanking initiatives targeting digital asset market participants, (e) orders regulatory clarity for digital assets and distributed ledger technologies, and (f) &nbsp;establishes the President’s Working Group on Digital Asset Markets, comprised of officials from multiple federal agencies and chaired by the Special Advisor for AI and Crypto.

As part of the Trump Administration’s efforts, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 122, which rescinds the controversial SAB 121. SAB 121 had required entities custodying their customers’ crypto-assets to record those holdings as liabilities on their balance sheets, thereby imposing substantial operational and financial burdens that discouraged the provision of such services. SAB 122 now requires that custodians apply authoritative standards on contingent losses and liabilities to determine whether they should recognize a liability related to risk of loss, and if so, how to measure it.

Simultaneously, Congress will prioritize legislation to provide regulatory certainty for digital assets and is expected to use the Congressional Review Act (CRA) to overturn rules promulgated by the Biden Administration that threaten the industry.

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On January 23, President Trump issued an EO, “<a href="https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/" target="_blank" rel="noreferrer noopener">Strengthening American Leadership in Digital Financial Technology</a>.” The same day, the SEC published SAB 122 which rescinded the earlier staff interpretive guidance, SAB 121. As the 119th Congress begins its work, members are prioritizing digital assets legislation, and are aligned with the White House and the Trump Administration’s nominees for cabinet and agency heads. These actions mark a profound shift from the Biden Administration’s often hostile approach to the digital assets industry, towards the Trump Administration’s promotion of the industry as a crucial part of innovation and economic development in the United States.

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The Digital EO’s purpose is to “promote United States leadership in digital assets and financial technology while protecting economic liberty.” It sets forth five policies to achieve this goal:

Private Use of Blockchain Networks. Protect and promote the ability of individuals and the private sector to access and use public blockchain networks, including to develop and deploy software, participate in mining and validating, transact without unlawful censorship, and maintain self-custody of digital assets.

Stablecoins. Protect and promote the U.S. dollar through development of dollar-backed stablecoins.

Access to Banking. Protect and promote fair and open access to banking services for all law-abiding individual citizens and private-sector entities.

Regulatory Clarity. Provide regulatory clarity and certainty built on technology-neutral regulations, frameworks that account for emerging technologies, transparent decision making, and well-defined jurisdictional regulatory boundaries.

Prohibiting CBDCs. Prohibit the establishment, issuance, circulation, and use of a CBDC within the United States.

The Digital EO effectively orders to end the war on crypto, end the SEC’s regulation by enforcement, and end the weaponization of the federal government to stifle the digital asset industry. The direct reference to software developers’ freedom to develop without persecution is especially notable given the actions and investigations launched by multiple agencies under the prior administration aimed at the development of privacy-enhancing software and DeFi protocols.&nbsp;

The Trump Administration’s rejection of CBDCs and promotion of U.S. dollar-backed stablecoins are intended to promote the dominance of the U.S. dollar. Dollar-backed stablecoins require the collateral of bank deposits or other cash-like assets that are traded in the traditional financial system and denominated in U.S. dollars. Therefore, the purchase of these stablecoins increases the demand for the U.S. dollar and helps protect it as the global reserve currency.

The policy of ensuring access to banking for digital market participants is a rejection of federal banking regulators’ debanking of individuals and entities involved in the digital asset industry, a practice known as “Operation Chokepoint 2.0.”

The Digital EO can best be read in conjunction with President Trump’s additional EO aimed to correct the prior aggressive enforcement against the digital asset industry, titled “<a href="https://www.whitehouse.gov/presidential-actions/2025/01/ending-the-weaponization-of-the-federal-government/" target="_blank" rel="noreferrer noopener">Ending the Weaponization of the Federal Government</a>.” That EO orders the review of activities over the past four years by departments and agencies exercising civil or criminal enforcement authority, and specifically calls on the SEC to identify instances of potential weaponization of the government, along with proposed remedial actions.

Revocation of Biden EO on Digital Assets

The Digital EO explicitly revokes President Biden’s <a href="https://www.bakerlaw.com/insights/executive-order-launches-comprehensive-us-policy-and-action-plan-for-digital-assets/" target="_blank" rel="noreferrer noopener">Executive Order 14067</a> on Ensuring Responsible Development of Digital Assets,&nbsp; revokes the U.S. Department of the Treasury’s prior Framework for International Engagement on Digital Assets, and orders that all policies and directives related to these revoked documents be rescinded. These actions renounce the Biden Administration’s approach to digital assets, which focused on Web3 as being a potential threat to consumers and national security. Instead, the Digital EO focuses on blockchain as a public good that serves economic liberty and U.S. innovation and economic development. &nbsp;

Working Group on Digital Assets, Regulatory Framework, and National Digital Asset Stockpile

The Digital EO establishes the President’s Working Group on Digital Asset Markets (Working Group) to effectuate the Trump Administration’s digital asset policy. The Working Group is chaired by the Special Advisor for AI and Crypto and includes officials from multiple federal agencies. The group’s primary goal is to propose a regulatory framework for digital assets, focusing on market structure, oversight, consumer protection, and risk management. The Digital EO also sets forth action items to be completed on an ambitious timeline—particularly given that the participants are not yet confirmed by the Senate. These actions include:

Within 30 days of the Digital EO, relevant agencies must identify all regulations, guidance documents, orders, or other items that affect the digital asset sector.

Within 60 days, the agencies must submit recommendations on whether the identified items should be rescinded, modified, or adopted.

Within 180 days, the Working Group must submit a report to the President with regulatory and legislative proposals for a comprehensive digital asset regulatory framework.

The Working Group’s 180-day report also coincides with another 180-day report that the President has <a href="https://www.whitehouse.gov/presidential-actions/2025/01/removing-barriers-to-american-leadership-in-artificial-intelligence/">ordered</a> to remove barriers to American leadership in artificial intelligence.

The Digital EO’s creation of a single, inter-agency Working Group, together with its command that the group develop a single comprehensive national approach to digital asset regulation, stands in stark contrast with President Biden’s <a href="https://www.bakerlaw.com/insights/executive-order-launches-comprehensive-us-policy-and-action-plan-for-digital-assets/" target="_blank" rel="noreferrer noopener">Executive Order 14067</a>, which called for <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/07/EO-Reports-Table.pdf" target="_blank" rel="noreferrer noopener">11 separate reports</a> by multiple federal agencies. This approach, which focuses on identifying and removing harmful elements affecting the industry, complements the revocation of Biden-era policies and President Trump’s newly announced strategy for reviewing and issuing regulations, thereby establishing a clean slate for future executive and regulatory action.

Relatedly, President Trump issued another EO, titled “<a href="https://www.whitehouse.gov/presidential-actions/2025/01/regulatory-freeze-pending-review/" target="_blank" rel="noreferrer noopener">Regulatory Freeze Pending Review</a>,” which prohibits the proposal or issuance of any new rule until it has been reviewed and approved by a department or agency head appointed by the President after January 20, 2025. It further orders the immediate withdrawal of any rules that were sent to the Office of Federal Register but not published in the Federal Register, to be reviewed and approved. It also requests the consideration of postponing for 60 days “the effective date for any rules that have been published in the&nbsp;Federal Register,&nbsp;or any rules that have been issued in any manner but have not taken effect, for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.”

The Digital EO also recognizes a potential U.S. digital asset stockpile and orders the Working Group to evaluate the potential creation and maintenance of a stockpile, and propose criteria for its establishment, potentially derived from cryptocurrencies lawfully seized by the U.S. government through its law enforcement efforts.

The Digital EO demonstrates a commitment to recognizing Web3 and digital assets as an industry that is not only legitimate and viable, but critical to U.S. growth and prosperity.

Recent Committee, Subcommittee, and Legislative Actions

President Trump has received significant support for the Working Group from Congress.<a id="_ftnref1" href="#_ftn1">[1]</a> In addition, Financial Services Committee Chairman French Hill (R-AR) indicated the committee’s commitment to “bring legal clarity to digital assets, providing innovators with new tools to build decentralized financial products and services that empower people to help one another and ensure America remains a leader in this space.” On January 22, Chairman Hill named the Members to its <a href="https://financialservices.house.gov/119th-congress-subcommittees/subcommittee-on-digital-assets-financial-technology-and-artificial-intelligence.htm" target="_blank" rel="noreferrer noopener">Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence</a> to be chaired by Rep. Bryan Steil (R-WI).

On January 23, the Senate Banking, Housing and Urban Affairs Committee created a new subcommittee on digital assets to be chaired by Senator Cynthia Lummis (R-WY), with strong support from Committee Chairman Tim Scott (R-SC), who stated that the new subcommittee “will ensure the committee is at the forefront of legislation to provide regulatory clarity for the industry.”

Additionally, the House Agriculture Committee, with jurisdiction over the CFTC, named Rep. Dusty Johnson (R-SD) as the Chair of its Commodity Markets, Digital Assets, and Rural Development Subcommittee. Even though the Senate Agriculture, Nutrition and Forestry Committee, which also oversees the CFTC, has not yet announced its subcommittees, digital assets legislation is a priority for the Committee’s Chairman, Senator John Boozman (R-AR).&nbsp;

The House of Representatives should be able to act sooner than the Senate on digital assets legislation. Late last year, House Majority Leader Steve Scalise (R-LA) said he wanted digital asset legislation to pass the House during the first 100 days of the 119th Congress. In light of the Digital EO and the mandated report, it’s possible that the House timeline could slip, but Congress will work closely with the Trump Administration to craft legislation and potentially make refinements to legislation from the prior Congress.

On January 22, Senator Ted Cruz (R-TX) and Rep. Mike Carey (R-OH) introduced a joint resolution of disapproval under the CRA to overturn the Internal Revenue Service’s recently issued <a href="https://www.theblockchainmonitor.com/blogs/weekly-blockchain-blog-january-13-2025/#treasury" target="_blank" rel="noreferrer noopener">final rule</a>, “Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales.” The CRA allows Congress to disapprove of a final rule issued by a federal agency. It is not yet known when Congress will consider this resolution, but the CRA includes expedited procedures for Congressional, and specifically Senate, consideration.

The Financial Services Committee’s February <a href="https://financialservices.house.gov" target="_blank" rel="noreferrer noopener">schedule</a> includes a February 6 hearing in the Oversight and Investigations Subcommittee on “Operation Choke Point 2.0: The Biden Administration’s Efforts to Put Crypto in the Crosshairs”; and a February 11 hearing in the Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee on “A Golden Age of Digital Assets: Charting a Path Forward.”

SEC’s Crypto Task Force and SAB 122

On January 21, Acting SEC Chairman Mark Uyeda launched an SEC <a href="https://www.sec.gov/newsroom/press-releases/2025-30">crypto task force</a>, led by Commissioner Hester Peirce. The Task Force will focus on assisting the Commission to establish clear regulatory boundaries, create “realistic paths to registration,” develop “sensible disclosure frameworks,” and “deploy enforcement resources judiciously.” The Task Force will coordinate not only with U.S. departments and agencies and Congress, but also with state and international counterparts. Significantly, the SEC’s press release affirmed that “[t]o date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way.”

Two days later, on the same day as the Digital EO, the SEC published <a href="https://www.sec.gov/rules-regulations/staff-guidance/staff-accounting-bulletins/staff-accounting-bulletin-122" target="_blank" rel="noreferrer noopener">SAB 122</a>. SAB 122 rescinds SAB 121, which had instructed entities with obligations to safeguard crypto-assets for their customers to present those crypto-assets as liabilities on the entity’s balance sheet. SAB 121 had stated that these liabilities should be measured at fair value at both their initial recognition and each reporting date, and had required entities to recognize an asset alongside the liability measured at the fair value of the crypto-assets at initial recognition and each reporting date. This created significant operational and financial burdens that discouraged banks and custodians from providing these services. Even the 118th Congress attempted to use the CRA to disapprove SAB 121. While this action had both bipartisan and bicameral support, Congress could not override former President Biden’s veto. &nbsp;

SAB 122 further instructs entities that have an obligation to safeguard crypto-assets for others to assess whether to recognize a liability due to the risk of loss associated with the obligation, and if applicable, measure it according to the authoritative standards for contingent losses and liabilities in Financial Accounting Standards Board Accounting Standards Codification Subtopic 450-20 or International Accounting Standard 37. Entities may apply SAB 122’s guidance on a retrospective basis in annual periods beginning after December 15, 2025, and may elect to apply SAB 122 to any earlier interim or annual financial statement period included in SEC filings after SAB 122’s effective date, i.e., the date it is published in the Federal Register.

SAB 122 sets the stage to create a markedly more business-friendly environment for SEC reporting companies to engage in digital asset custody services. Among other things, SAB 122 makes it easier for digital asset exchanges and custody providers to become publicly traded companies in the United States. It will also help privately held digital asset companies to present more favorable balance sheets as they undergo audits and seek financing. Additionally, SAB 122 presents new potential for national banks to one day provide digital asset custody services in accordance with the Office of the Comptroller of the Currency’s &nbsp;<a href="https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2020/int1170.pdf" target="_blank" rel="noreferrer noopener">Interpretive Letter #1170</a>, which was issued during the first Trump Administration.

In his first days in office, President Trump is already taking substantial steps to make the United States “the world capital of crypto.” The Trump Administration’s actions mark an about-face from the Biden Administration’s approach. Moving from the Working Group’s comprehensive report, we also expect more activity from the Oval Office and on Capitol Hill. There will likely be significant additional action on digital assets from the SEC, especially after the expected confirmation of Paul Atkins as SEC Chairman. At the CFTC, agency action on digital assets could occur sooner under Acting Chair Caroline Pham, or later after a new Chair is announced.

The regulatory landscape for the U.S. digital assets market is poised for a sea change in 2025. BakerHostetler is here to help market actors navigate this rapidly evolving environment and seize opportunities through our interdisciplinary attorneys in our Web3 and Digital Assets team, Digital and Innovative Markets team, Federal Policy team, Corporate and Securities team, Financial Services team, and White Collar, Investigations, and Securities Enforcement and Litigation team. Please feel free to contact any of our experienced professionals if you have questions about this alert.

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<a href="#_ftnref1" id="_ftn1">[1]</a> House Financial Services Committee Chairman French Hill (R-AR) published a <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409447">press release</a> applauding President Trump’s efforts on behalf of the Committee as did Senate Banking, Housing and Urban Affairs Committee Chairman Tim Scott (R-SC).

Trump Administration Immediately Positions US to Become ‘World Capital of Crypto’

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