Is the Future of Digital Assets in the United States Bright Again?

Yes, indeed! What Brad Garlinghouse of Ripple Labs called “Gensler’s reign of terror” ended with Securities and Exchange Commission (SEC) Chair Gary Gensler’s resignation upon President Donald Trump’s inauguration. Paul Atkins, who has co-chaired the Token Alliance, spoke of the need for a “change of course” at the SEC and will be given charge of the SEC when he is confirmed as its new Chairman.

While the greatest deliberative body takes time to exercise its constitutional role of advice and consent, President Trump and Acting SEC Chairman Mark Uyeda are moving ahead at lightning speed, each taking action in the first week of the new administration. The long-awaited paradigm shift in regulation for digital assets is here and the market likes what it sees, with Bitcoin now trading near an all-time high and the total market capitalization of digital assets topping the US$3 trillion mark. Projects are once again being funded in—and development teams are returning to—the United States.  

The day after his inauguration, President Trump signed an Executive Order, Strengthening American Leadership in Digital Finance Technology, aiming to “support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.” This comes on the heels of a newly announced Crypto Task Force at the SEC, dedicated to developing a comprehensive and clear regulatory framework for digital assets, including “crypto” assets.

The Executive Order

In his Executive Order, President Trump points to the crucial role that the digital assets industry plays in the innovation and economic development of the United States, declaring it to be the policy of his administration to:

• Protect and promote public blockchain networks, mining and validating, and self-custody of digital assets.
• Protect and promote the U.S. dollar by promoting stablecoins worldwide.
• Provide regulatory clarity and certainty built on technology-neutral regulations, including well-defined jurisdictional regulatory boundaries.

President Trump’s 2025 Executive Order revokes former President Biden’s 2022 Executive Order regarding crypto assets and orders the Secretary of the Treasury to likewise revoke all prior inconsistent Treasury policies.

Most significantly, the Executive Order establishes the “President’s Working Group of Digital Asset Markets” to be chaired by the “Special Advisor for AI and Crypto,” Silicon Valley venture capitalist David Sacks, who is sometimes called the “Crypto Czar.” Its Executive Director will be “Bo” Hines of North Carolina. The Working Group will consist of specified officials (or their designees) such as the Secretaries of the Treasury, Commerce, and Homeland Security, the Attorney General, the Director of Office, Management and Budget, the Homeland Security Advisor, and the Chairs of the SEC and the Commodities and Futures Trading Commission (CFTC).

The Working Group has been charged to hit the ground running:

• By February 22, 2025, the Treasury, DOJ, SEC and other relevant agencies included in the Working Group shall identify all regulations, guidance documents, orders, or other items that affect the digital assets sector. In other words, what has the federal government done so far?

• By March 24, 2025,each agency shall submit recommendations with respect to whether each identified regulation, guidance document, order, or other itemshould be rescinded or modified, or, for items other than regulations, adopted in a regulation.
  
  By the end of last week, the SEC had already rescinded Staff Accounting Bulletin 121, an especially troubling piece of guidance that the SEC never approved and that Congress had sought to overturn but former President Biden retained. SAB 121 required crypto custodial banks to carry customer assets on their balance sheets—something required for no other asset. Upon rescinding SAB 121, SEC Commissioner Hester Pierce tweeted, “Bye, bye SAB 121! It’s not been fun.” Another piece of SEC guidance that might be on the chopping block is the so-called “Framework for ‘Investment Contract’ Analysis of Digital Assets,” which has confounded the digital assets industry since it was first adopted.

• By July 22, 2025, the Working Group shall submit a report to the President recommending i that advance the policies established in the order. In particular:
  • The Working Group will propose a federal regulatory framework governing the issuance and operation of digital assets, including stablecoins, in the United States. The Working Group’s report shall consider provisions for market structure, oversight, consumer protection, and risk management.
    
    The Working Group will have significant choices to make in this regard: Will it back the “FIT 21” bill that has already been approved by the U.S. House of Representatives, or will it seek to chart a different course? Will it back a merger of the CFTC with the SEC? How will it reconcile the desire to support technology innovation with national security interests and investor protection?
  • The Working Group will evaluate the potential creation and maintenance of a national digital asset stockpile and propose criteria for establishing such a stockpile, potentially derived from cryptocurrencies lawfully seized by the federal government through its law enforcement efforts. In this regard, President Trump might be seen as having backed off his earlier promise to create a Bitcoin reserve in the United States, as it is now being considered rather than proposed for immediate adoption. The word “Bitcoin” does not appear even once in the Executive Order.

President Trump’s Executive Order also prohibits the establishment, issuance, or promotion by federal agencies of Central Bank Digital Currencies (CBDCs) within the United States or abroad, terminating any ongoing plans or initiatives related to the creation of a CBDC within the United States. The libertarians who dominate appointments in the financial services sector of the administration are strongly opposed to CBDCs, viewing them as a threat to personal liberty.

In issuing this Executive Order, President Trump fulfilled his campaign promises relating to crypto assets. In a July 27, 2024, address to the Bitcoin 2024 Conference in Nashville, he promised to “end Joe Biden’s war on crypto.” He promised:

• To “fire Gary Gensler,” who resigned upon Trump’s inauguration.

• To “immediately shut down Operation Chokepoint 2.0,” which he is carrying out in his order to Department of the Treasury.

• To appoint the aforementioned Working Group.

• To defend the right to self-custody.

• To ban CBDCs.

In the first week, we are seeing that, at least thus far, promises made are promises kept.

SEC Crypto Task Force

On the SEC side, Commissioner Hester Pierce, known as “Crypto Mom,” will head the Crypto Task Force that will work to develop a “sensible regulatory path that respects the bound of the law.” The SEC under former President Biden used “regulation by enforcement” rather than “regulation by rulemaking and interpretation” to regulate the crypto asset industry. President Trump’s SEC has already signaled the “course correction” that Paul Atkins called for before the election. Both Commissioners Peirce and Uyeda worked for Atkins in his prior stint as an SEC Commissioner. Others have observed that the Atkins-Peirce-Uyeda “triumvirate” might be the most powerful cohort of Commissioners that the SEC has ever seen.

The SEC announcement states that the Task Force will be focused on developing clear regulatory lines, realistic paths to registration, sensible disclosure frameworks, and deploying enforcement resources judiciously. The Task Force plans to hold future roundtables and is asking for public input as well.

The day that the SEC Task force was announced, Foley & Lardner submitted suggestions to the SEC for roundtable topics. Our suggestions included:

• What Securities Act registration exemptions should be adopted to broaden market access to digital assets? An example might be the “safe harbor” that Commissioner Peirce proposed and refined, only to have it ignored by the Gensler SEC.

• What guidance should the staff have given that it has failed to give? What guidance should be withdrawn? There has been no guidance about how Regulation S applies to digital asset offerings, to point out one shortcoming. The staff might have given guidance, but Chairman Gensler prohibited it, adopting the view that the SEC does not give legal advice. 

• What needs to change for you to “come in and register” if you are a token “issuer”? Plainly the system is broken now, as those who have tried to register were delayed indefinitely and ultimately conceded defeat. Others, seeing this, never even tried.

• What needs to change for you to “come in and register” if you are a token “dealer” or “exchange”? These questions are paramount for crypto exchanges that do business in the United States and have been sued by the SEC for failing to register.

• What needs to change for you to “come in and register” your crypto brokerage firm? What more can be done for you to “come in and register” your crypto fund? How can the SEC facilitate trading in securities tokens and other tokenized assets? How can the SEC better collaborate with the CFTC regarding digital assets? What legislation should the SEC recommend for adoption by Congress? All these questions, and more, need to be addressed by the SEC, engaging the public as the answers are determined. In each case, the SEC would act consistently with its statutory mandate to protect securities investors and assure fair and orderly markets.

下一步工作

Foley has offered to assist the SEC in its consideration of these questions and expect to be involved in some capacity along the way. Likewise, we expect to make submissions to the President’s Working Group. If you would like to be represented in that process to make sure that your views are considered, please reach out to either of the authors. We are engaging with the House Financial Services Committee and the Senate Banking Committee in addition to the Trump Administration, the SEC, and the CFTC.

Similarly, if you have a development team or a product and are looking to access the U.S. digital asset markets lawfully, we are standing by to help.