At a Glance

  • U.S. President Donald Trump signed an executive order on Thursday prohibiting government agencies fromissuing, establishing, or promotingcentral bank digital currencies (CBDCs), unless required by law. The executive order defines a CBDC as "a form of digital money or monetary value denominated in the national unit of account that constitutes a direct liability of the central bank."
  • This move fulfills a campaign promise by Trump. According to a 2024 Politico report, Trump vowed to blockinstitutions such as the Federal Reservefrom creating digital currencies, instead supporting "decentralized" digital currencies like Bitcoin.
  • The executive order also establishes a presidential working group aimed at providing "regulatory clarity" for the digital asset sector, led by "White House AI and Crypto Czar" and former PayPal executive David Sacks. The working group will explore matters such as creating a national digital asset stockpile.

In-Depth Analysis

This move is Trump's latest attempt to court the cryptocurrency industry early in his presidency. He has previously nominatedpro-crypto leadersto institutions such as the U.S. Securities and Exchange Commission. Trump also declared in a televised address to the World Economic Forum on Thursday that he wants to make the U.S. the"world capital of artificial intelligence and cryptocurrency"。

According to Gibson Dunn analysis, Trump's Thursday executive order revokes the Biden-era 2022 order regardingexploring the role of digital assets, including CBDCs, in the financial system.

Michael Levine, CFO of blockchain and cryptocurrency security platform Fireblocks, said in an email statement to CFO Dive: "President Trump's executive order marks a pivotal moment in the development of digital financial technology, rejecting CBDCs in favor of decentralized digital assets and private sector innovation. By prioritizing privacy and opposing what some see as the 'monetary surveillance' risks of CBDCs, this administration is conveying a commitment to economic freedom and fostering trust in blockchain solutions."

Miles Fuller, senior director of public sector operations at Taxbit, a digital asset tax and accounting services provider, told CFO Dive that banning CBDC issuance may be the "sharpest statement" in the executive order—it clearly signals that the U.S. will not create a central bank-backed digital currency.

Fuller noted that for CFOs and other business leaders, the executive order also indicates that cryptocurrency is an area leadership needs to watch closely, whether or not they have already used or avoided digital assets.

"Maybe I can stop avoiding cryptocurrency because the uncertainty will disappear," Fuller said in an interview regarding business leaders. "Or if we're already doing crypto-related business, maybe some regulations will come out that change compliance requirements. So we need to understand these changes. How will things be different?"

One positive aspect of the executive order is the establishment of a dedicated working group aimed at clarifying some of the gray areas in the cryptocurrency space.

"It's exciting to see a very focused working group appointed to address the friction points in the crypto space over the past few years," Fuller said.

These friction points include ongoing battles over the multiple definitions of digital assets (e.g., what counts as a security, commodity, or currency), as well as accounting and tax standards for such assets. Also on Thursday, the U.S. Securities and Exchange Commissionrevoked a Biden-era rulethat required companies holding such assets to record them as liabilities—a rule opposed by industry advocates who argued it discouraged companies from holding cryptocurrency.

Fuller said one of the first things the working group might tackle is providing a definition for so-called "stablecoins."

According to a 2023 World Economic Forum report, a working definition of "stablecoin" is an asset whose value is pegged to another asset but is typically issued byprivate entities rather than central banks. However, this definition is not fixed nor a regulatory standard; for example, some stablecoins are redeemable one-to-one with currencies like the U.S. dollar, while others maintain value stability algorithmically and are not redeemable, Fuller said.

"This is exactly where I think the government needs to step in and clarify the 'actual definition,'" Fuller said of stablecoins.

Although the U.S. Treasury has provided some guidelines for such assets, and government leaders such as Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY)have also proposed legislation on this, the U.S. still lacks a formal regulatory framework for such assets.

According to the executive order, the presidential working group will "propose a federal regulatory framework governing the issuance and operation of digital assets, including stablecoins, within the United States." The order states: "The working group's report should consider regulations regarding market structure, oversight, consumer protection, and risk management."