Donald Trump Orders CBDC Ban, What Will This Impact on the Crypto Market?

Bittime - US President Donald Trump has begun fulfilling his promises to the crypto market just four days after his inauguration. 

Through an executive order entitled "Strengthening American Leadership in Digital Financial Technology," Trump established policies that support the growth of the digital asset industry in the US, while firmly stopping the development of central bank digital assets (CBDC).

Check out the news and the impact of Trump's decision on the crypto market in this article!

Promotion of Access to Public Blockchain Networks

This executive order highlights the importance of fair and open access to banking services as well as greater engagement in blockchain technology. 

During this time, many financial institutions, especially banks, have experienced difficulties in interacting with public blockchains due to regulatory and compliance challenges. Trump sought to remove these barriers by creating a friendlier environment for innovation.

Additionally, the Securities and Exchange Commission (SEC) decision to repeal Staff Accounting Bulletin 121, which previously required banks to treat crypto assets as liabilities, opens up new opportunities for traditional financial institutions to offer crypto services.

Read also: Will Donald Trump's CBDC Ban Negatively Impact XRP Or RLUSD?

US CBDC Delay and Its Impact

This executive order also explicitly prohibits the development of CBDCs in the US on the grounds that CBDCs potentially threaten the stability of the financial system, individual privacy and US economic sovereignty. 

The move is a reversal of the previous administration's policy under Joe Biden, which explored the potential of CBDCs to improve the efficiency of cross-border payments.

In contrast, the Trump administration appears more inclined to support the development of dollar-backed stablecoins issued by the private sector. 

This move could lead to major differences between the US approach and other countries developing their own CBDCs.

Support for Stablecoins and Strengthening of the US Dollar

In his executive order, Trump emphasized the importance of stablecoins as a means of strengthening the sovereignty of the US dollar in global markets. 

The US government plans to promote the legal use of stablecoins to ensure efficient cross-border payments and strengthen the dollar's role in the global financial sector.

Implications for Crypto Markets

Trump's move was welcomed by most of the crypto community who felt previous policies had too restricted innovation in this sector. 

Nonetheless, Trump's issuance of "memecoin" tokens that left 80% of the supply for himself raised criticism regarding personal financial motives.

The lifting of strict policies from the Biden era and this pro-crypto stance is believed to provide a major boost to the adoption of digital assets in the US. 

With regulatory clarity, this industry can develop more rapidly and attract more investment.

Conclusion

This new executive order marks a new era for the digital asset industry in the US. With its rejection of CBDCs and support for stablecoins, the Trump administration is seeking to create a friendlier environment for innovation and investment in the sector. 

However, regulatory challenges will still be a major concern in the future. Will this have a big impact on the crypto market?

FAQ

What Does a CBDC Do?

Central Bank Digital Currency (CBDC) or Digital Rupiah is a form of digital money issued and regulated directly by the central bank. 

What Coins Include CBDC?

Each country that develops a CBDC will have a different name.  Some examples of CBDCs that have been developed or are in the development stage include: Digital Yuan (China), e-Naira (Nigeria), Sand Dollar (Bahama)

How Does a CBDC Work?

The way CBDC works is generally similar to other electronic payment systems. CBDC is issued directly by the central bank, so it has full support from the government.

Most CBDCs use blockchain technology to record all transactions and ensure data security. 

People can access CBDC through their bank accounts. CBDC transactions can be carried out in real-time, making it faster and more efficient than conventional payment systems.

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Also, visit the Bittime Blog for interesting updates and educational information about the crypto world. Find reliable articles about Web3, blockchain technology, and digital asset investment tips designed to enrich your crypto knowledge.

Reference

Lewis Mclellan, Trump kicks crypto policy into gear and hammers nail in US CBDC coffin, accessed January 26

Lynne Marek, Trump order embraces stablecoins, bars CBDCs, accessed January 26

Author: SD