As Donald Trump gets ready to take office, he's set to drop some major executive orders on cryptocurrency. The financial world is holding its breath for a shake-up. Word is, he might create a crypto advisory council and even scrap some controversial rules like SAB 121, suggesting a move towards a more welcoming environment for crypto. Let’s dive into what these changes could mean for international crypto regulation compliance.
Trump's Crypto Game Plan
Trump's plans for executive orders on cryptocurrency are expected to shake up both domestic and international crypto regulation. These orders will likely mark a stark contrast to the Biden administration's tighter grip on the industry, and that could shift how global markets view and regulate crypto. By emphasizing cryptocurrency, the new administration acknowledges its growing role in finance, but also highlights the need for a sensible regulatory approach.
Crypto Advisory Council: Who's In?
One of the first things on the agenda is to set up a presidential crypto council. It’s expected to be packed with around 20 high-profile figures from the crypto world, mostly CEOs and founders. These seasoned pros will likely dish out policy advice and guide the president on digital asset matters, shaping the industry during his term.
This move comes after the crypto community has been calling for a structured conversation with regulators and lawmakers. By forming a council that includes industry voices, the administration might be setting a new standard for other countries to follow when it comes to engaging with the crypto space. This could usher in a new era of cooperation and industry-friendly regulations.
Ditching SAB 121: What It Means for Crypto Custody
Another key focus of Trump's orders will be on the SEC's SAB 121, a contentious accounting rule that requires firms holding crypto to treat their clients' assets as liabilities on their balance sheets. This rule has faced heavy criticism from the crypto world, as it makes financial reporting a headache and dissuades U.S. banks from dealing with digital assets.
If Trump’s first-day orders do repeal this rule, it would likely be a relief for the industry. While Congress had previously passed a measure to repeal SAB 121 in 2023, Biden had vetoed it, leaving the rule intact. Scrapping SAB 121 could mean less transparency for the risks tied to crypto custody, potentially leading to poor risk management and financial misrepresentation.
More Changes Ahead?
But that’s not all. Sources say Trump might be eyeing more reforms. One idea is to set up a crypto working group with officials from the SEC and the CFTC. This group would aim to streamline the regulation of digital assets and create a consistent regulatory approach.
On top of that, Trump could direct the Secretary of State to push for international cooperation on crypto innovation. This move could help keep the U.S. in the lead in digital asset development and adoption. If we see international collaboration, it might lead to more standardized regulations, which could bring stability to global crypto markets.
Banking and Cryptocurrency: A Tough Nut to Crack
Trump’s team is also looking at ways to tackle the “de-banking” issue. For those not in the know, this is when crypto firms find it hard to access traditional banking services. Crypto companies have long struggled to get banks to work with them due to all the regulatory uncertainty. This administration's focus on banking and cryptocurrency might help open some doors.
While Trump's orders might ease some U.S. regulations, global crypto firms will still face a maze of regulations, especially in regions like the EU with its MiCA regulation and DORA. Companies will need robust compliance strategies and to stay ahead of new regulations.
Crypto Ball: A Place to Be
As the inauguration day approaches, crypto industry leaders are scrambling to get in good with the new administration. The inaugural Crypto Ball on January 17 is the place to be, with a VIP reception hosted by Trump's super PAC, MAGA Inc. Although Trump won’t be there, crypto czar David Sacks will be—if you can shell out $100,000 for a ticket.
Big names like Michael Saylor and Brad Garlinghouse are expected to show up. It’s an opportunity for industry leaders to network and align with the new administration’s goals.
Summary: The Road Ahead
Trump's executive orders on cryptocurrency are poised to create waves in international crypto regulation, possibly ushering in a more collaborative and favorable regulatory environment. As the U.S. steps into a new era of crypto regulation, the world will be watching closely.
