Trump Crypto Executive Order: A New Dawn

in #hive-1679222 days ago

I have to give him some credit. When it comes to campaign promises regarding crypto, President Donald Trump is following though.

First he issued a pardon for Ross Ulbricht, something that crypto community sought for years. This was followed up by an executtive order being signed which we will dig into.

As an aside, in a virtual speech to the WEF crowd at Davos, Trump stated he wanted to make the United States the leader in crypto and AI. As regular readers know, to me, these technologies are linked together.

Here is a summary of the order which we will go through.

Trump Crypto Executive Order: A New Dawn

We start with the establishment of regulation.

This one means little, especially after a recent Supreme Court ruling. The departments no longer have the ability to "write law". Congress is going to tackle this issue for anything substantial to emerge. However, directing agencies such as the SEC and CFTC to develop frameworks can feed into bills which Congress eventually votes upon.

The second one, promotion of Bitcoin is also odd. On that, I will simply say "okay".

It is the final two where the juice resides.

The Strategic Reserve Holding Digital Assets

One thing that stands out is the use of "digital assets" instead of Bitcoin. This means it could be more expansive over time.

Personally, I do not know the law or the process. Does this executive order really do anything regarding the strategic reserve? To me, that sounds like something that would require Congress. If that is the case, this set the focus but doesn't have teeth.

That doesn't mean it is without utility.

We are seeing a massive change in sentiment regarding the United States Government. The tonality of this EO means agencies are not going to be anti-crypto. It is also setting the table for a push in Congress to get approval on adding digital assets (Bitcoin) to the strategic reserve.

From a crypto perspective, this also opens up the door for others to follow. We see various proposals (bills) being proposed, not only in the United States but different countries. If many are convinced the United States is going down this path, it might incentivize others to join in.

No CBDC

Many fear the creation of a central bank digital currency (CBDC). Trump is obviously against it.

This is a convoluted situation so let's dig through it.

To start, the President has no authority over The Federal Reserve. He can issue all the EOs in the world, they mean nothing to Powell.

What this means is the Fed is free to establish a CBDC. Powell could create one tomorrow. There is a limitation. The Fed cannot arbitrarily create new legal tender. That is outside the scope of what it can do.

Basically, the Fed can create a token that is used for transactions between banks. This could be redeemable for a US dollar (banknote), which is legal tender. Bascially, it could be the Fed's own stablecoin.

But why would the Fed create that when it already has one. That is what Reserves are. When the Fed "prints", it is producing a bank instrument that goes on the balance sheets of banks. This is NOT legal tender.

Hence, the CBDC from the Fed will only be for the banking system.

CBDC As Legal Tender

If the Fed wanted to create a CBDC as legal tender, it would need approval from Congress. In other words, the law has to be changed.

The Federal Reserve Act puts forth what legal tender is. Banknotes are the only libaility on the Fed's balance sheet which meets this requirement. For something different, such as a CBDC, to fall under that category, a new law has to be passed.

This is what makes the EO interesting.

If a new law is required to create a CBDC that is legal tender, guess who signs it? Trump. If he is against it, then he can simply veto the bill.

Does this mean the EO has no merit? Not necessarily.

What this does prevent is the Treasury from trying to get into the game. There were many politicians, especially under Biden, who wanted to get Treasury to produce a "digital dollar". Obviously, the politicans did such a great job with fiscal policy, amassing tens of trillions in debt, they feel handling monetary policy is a good idea also.

This basically corners the Treasury (or people within it) from going down this path. It also clearly stated to the Fed that, even if it wanted to pursued, it will not become law.

The result is the next 4 years will not see a CBDC legalized in the United States (unless Trump changes his mind).

The Crypto Future

The crypto push is parallel to AI. We saw the announcement of Stargate earlier in the week.

Here is where the crypto future is bright.

We know the numbers associated with AI is enormouse. The denomination will get into the trillions. Of course, this means there is huge potential.

On this one, forget Bitcoin; it will be a minor actor. The real players will be the billions of agents that are performing tasks on a daily basis. All of this will be tied to infrastructure, much of it decentralized. Networks will become even more important, with AI agents flowing through them.

The result will be trillions in value generated. While it is possible (likely) that no single token matches Bitcoin, the totality will far surpass it. This could help to drive value to coins that are tied to networks with these agents. At present, Etheruem and the other EVM chains are leading candidates.

We see a massive shift in sentiment by the United States Government regarding crypto and AI. This will allow for greater innovation, outside the bounds of a few major corporations.

It certainly is a new dawn.

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Very true, both A.I and crypto must work together to democratize access to greater assets...

We should be the global leader in crypto, and its about time we finally have a President who gets it. Now, will somebody please create an account for him here and stock it up with some HIVE!

Well crypto is global, so I am not sure there is a global leader when it comes to the evolution of the entirety. We never knonw where the next breakthrough will come from. The US has the advantage with VC money and centralized development (along with China). That is not what the future of Web3 is in my opinion.

The next $10 billion crypto company can come from anywhere.

Ross is free! !BBH

I can tell nothing about but, BULLISH for crypto!

Make crypto and blockchain great again, yeah!

Maybe the US dollar is under pressure from BRICS and Trump realizes that the economy would be more dependant on Crypto in the future.

Maybe the US dollar is under pressure from BRICS...

As the USD only gets stronger.

The BRICS argument has been made for 15 years and the only get further behind.

In my experience, having worked at a state legislature, it is possible the federal government has a similar process.

State agencies would actively lobby the legislature for changes in the law. And they would also serve as subject matter experts to testify at committee hearings to explain what problem the bill solves. Most agencies would hire a liaison to work with the legislature on bills and constituent matters.

So, if federal agencies work in much the same way, they would be in discussions with Congress on how to craft the legislation to satisfy the Executive Order. In the course of making the sausage, Congress will debate the policy, add and/or remove provisions, and pass something close to what was asked. And all bills have a fiscal note informing the legislators with an estimate of the cost or revenue from the changes.

You are correct that Trump can't just sign these things into law. But it sets wheels in motion.

As for the Federal Reserve, it is technically not a federal agency. But it is also not above the law. Whatever independence they have is only because the federal government allows it.

I have to be honest, his actions lately are changing how I perceive Trump. Much respect!

I new trump will keep to his promises, if not any other, but at least crypto. He can't make friends with doge father and be a mother f*cker

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This Executive Order is a big development in US crypto. It will impact globally and this also clears the road to bitcoin reserve. I'm not clear how NO CBDC will benefit the Bitcoin and cryptocurrencies.

Yep. It was the timeframe I was operating upon. The lives of people who looked at in regards to this target date will do very well.

The tonality of this EO means agencies are not going to be anti-crypto.

This is good enough. I wonder what is in their minds that made them revise BTC to digital assets.

I expect that PH will soon follow the US footstep on crypto.

!BBH

!PIZZA

Yeah. Government support is not required. However, governments trying to take down crypto is a headwind.

PIZZA!

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