Day One Crypto Shake-Up: Trump Plans to Scrap Crypto Liability Rule

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It’s anticipated that President-elect Donald Trump will revoke Securities and Exchange Commission (SEC) directive SAB 121 on his inauguration day, which could allow banks to classify cryptocurrencies as assets instead of liabilities. This move may indicate a more favorable stance towards cryptocurrency within U.S. government policy.

Executive Orders on Day One

Based on The Washington Post’s report, it is anticipated that President-elect Donald Trump will implement executive orders concerning cryptocurrency regulations right away. A significant action expected on his inauguration day involves overturning Staff Accounting Bulletin (SAB) 121, a rule established by the U.S. Securities and Exchange Commission (SEC), which currently obliges banks to categorize digital assets as liabilities.

The debated accounting rule has faced criticism from cryptocurrency supporters, who assert it hinders financial institutions’ capacity to interact with digital assets. They believe that categorizing custodial crypto as liabilities presents an inaccurate representation of a company’s financial standing, discouraging additional institutional involvement in the sector.

Legislative Push for Change  

A piece of legislation supported by both parties, intended to nullify SAB 121, has made its way through Congress and was more recently vetoed by President Biden. It’s been reported that members of Donald Trump’s transitional team are working together with crypto industry leaders to develop a plan for reversing this policy.

As an analyst, I anticipate that the suggested executive order may stimulate banks and financial institutions to custody Bitcoin (BTC) and other digital currencies for their clients. Such a shift could potentially broaden the involvement of institutions within the cryptocurrency market, marking a significant expansion in this sector.

Building Alliances in Tech

According to a report by The Washington Post, there seems to be a budding partnership forming between President-elect Trump and some influential figures in the tech industry, such as Elon Musk, Marc Andreessen, and David Sacks. This alliance supposedly started during a gathering at Trump’s golf club located in Bedminster, New Jersey.

Trump has underscored the significance of propelling U.S. technology ahead to outperform China, dismantle regulatory hurdles, and strengthen emerging industries such as cryptocurrency. Previously somewhat overlooked during the Biden administration, venture capitalists now perceive a chance for increased participation in shaping national policies.

Market Implication of Pro-Crypto Leadership   

Trump’s positive view on cryptocurrencies is reinforced by his selection of cabinet members who are supporters of the industry, like Paul Atkins, now leading the SEC. This choice suggests a possible movement towards regulatory structures that encourage innovation and expansion within the digital assets sector.

Experts believe that if Donald Trump continues to advocate for cryptocurrencies, it might lead to a broader revival within the market. Even though there have been recent drops in value, his administration’s expected supportive regulations and institutional backing could inspire increased trust among investors and foster growth within the crypto sector.

A National Bitcoin Reserve?

One of the more ambitious ideas being discussed is the creation of a national reserve dedicated to Bitcoin. The Bitcoin Policy Institute has put forth a plan suggesting an investment of $21 billion over the course of a year, aimed at designating Bitcoin as a strategic reserve asset. Brian Hughes, speaking on behalf of the Trump transition team, has confirmed their dedication to fostering American dominance in the cryptocurrency sector.

As the inauguration draws near, members of the cryptocurrency world are eagerly waiting for clear policy decisions from the new government that may significantly alter the course of the industry in the future.

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2025-01-14 18:01