While a significant, broad regulatory shift in President Trump’s second term was widely expected, few predicted the speed and scale of the changes occurring within the digital asset ecosystem.
The past five weeks have been some of the most consequential for the US digital asset industry since Satoshi released the Bitcoin whitepaper in 2008 or perhaps the launch of the Ethereum protocol in 2015.
Proponents of digital assets have long argued for a more open regulatory environment that encourages innovation while providing much needed regulatory clarity. In the days immediately following his inauguration, President Trump signed an Executive Order on digital assets, while Congress formed a new digital asset subcommittee and bi-partisan working group, and the SEC launched a new crypto task force, amidst a flurry of other activity.
While there has been significant action taken to date, it is important to remember that it will take time for legislation and a supporting regulatory framework to fully materialize. Potential legal challenges could also temper the pace of rollout.
Nonetheless, business leaders at both digitally native and traditional finance firms are wasting no time embracing the new administration’s highly supportive stance towards cryptocurrency and the broader digital asset ecosystem.
Executive Order
On January 23, President Trump issued Executive Order ‘Strengthening American Leadership in Digital Financial Technology’.1 The stated policy objective is to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy. The accompanying fact sheet clarifies that President Trump intends to make the US the “crypto capital of the planet”.2
The Executive Order establishes a formal Working Group chaired by crypto/AI czar David Sacks and includes among its members Treasury Secretary Scott Bessant, and the chairs of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
At a high level, the Working Group is required to identify problematic regulation or guidance for potential rescission, develop a federal regulatory framework for digital assets, and evaluate the potential creation of a national digital asset stockpile. In developing these recommendations, the Executive Order signals the intent of the Working Group to engage directly with experts in the digital asset markets.
Congressional Digital Asset Subcommittees and Working Group
On the Congressional front, the Senate Banking Committee formed a new Subcommittee on Digital Assets, chaired by Senator Cynthia Lummis, who has long been a vocal proponent of bitcoin.3 The Subcommittee has two primary objectives:
The House of Representatives had already established its Subcommittee on Digital Assets, Financial Technology and Artificial Intelligence. From a digital asset perspective, the House Subcommittee has jurisdiction over digital assets, cryptocurrencies, stable assets, and central bank digital currencies.
In addition to the subcommittees above, republican leadership announced a new bicameral Working Group to focus on legislation for both a crypto regulatory framework and for stablecoins.4
Lastly, Congressman Bryan Steil, along with House Financial Services Committee Chair French Hill, recently published an op-ed in Coindesk, which concludes that the “’Golden Age’ of digital assets in the United States begins now”.5
Legislation
While some in the digital asset industry expected a broad digital asset regulatory framework, sometimes referred to as a “market infrastructure bill”, to be first in line for legislation, it has become clear that US dollar-pegged stablecoins is priority number one. Both the Senate and House digital asset subcommittees immediately got to work, each introducing its own draft stablecoin legislation.
In the Senate, Sens. Tim Scott and Bill Hagerty, along with long-time crypto advocates Cynthia Lummis and Kirsten Gillibrand, introduced the Guiding and Establishing National Innovation for U.S.
Stablecoins, the GENIUS Act.6 In the House, Reps. French Hill and Bryan Steil released a draft bill to establish a framework for the issuance and operation of dollar-denominated payment stablecoins in the United States, the STABLE Act.7 While there are differences between the two bills, including, for example, the scope of allowable assets backing a stablecoin, each version designates the Office of the Comptroller of the Currency (OCC) as the primary federal regulator.
It is noteworthy that Ranking Member Maxine Waters, the top Democrat on the House Financial Services Committee, unveiled her own proposed legislation in response.8 Key differences in the Waters bill include that it designates the Federal Reserve as the primary regulator and limits stablecoin issuers to financial institutions.
Regulatory Activity
The heads of the SEC and CFTC both stepped down and have been replaced on an interim basis by respectively Acting Chairmen Mark Uyeda and Caroline Pham.
In his very first action as SEC Acting Chairman, Mark Uyeda formed a new Crypto Task Force, led by SEC Commissioner Hester Peirce.9 The task force is meant to provide clarity on the application of federal securities laws to the crypto market and to recommend practical policy measures that aim to foster innovation and protect investors.
Commissioner Peirce subsequently outlined the priority topics of the task force, in her statement ‘The Journey Begins’.10 These priority topics include:
Other priorities include modifying existing paths to registration, an appropriate regulatory framework for custody of client assets, clarity on whether crypto lending and/or staking are covered by securities law and potentially setting up a cross-border regulatory sandbox.
The task force has already begun taking action, meeting with industry participants and pausing certain pre-existing enforcement litigation, a trend that most expect to continue under incoming SEC Chairman Paul Atkins.
Over at the CFTC, Acting CFTC Chairman Caroline Pham announced a ‘CEO Forum’ of industry-leading firms to discuss the launch of the CFTC’s digital asset markets pilot program for tokenized non-cash collateral such as stablecoins.11 Interestingly, the participants disclosed in the accompanying media release are all crypto-native firms, including Circle, Coinbase and Ripple.
From a personnel standpoint, CFTC Acting Chairman Pham appointed her top advisor, Harry Jung, as the Designated Federal Officer of the CFTC’s Global Markets Advisory Committee. In this capacity, he will lead the CFTC’s engagement on crypto, decentralized finance (DeFi) and other digital assets.12
Leadership changes are also underway at the primary Federal Banking Agencies. These changes will include new leads of the Federal Deposit Insurance Company’s (FDIC), Consumer Financial Protection Bureau (CFPB), the OCC, and the Federal Reserve Vice-Chair for Supervision.
Aside from the leadership changes, there has been less public activity at the Federal Banking regulators compared to the Securities Markets regulators. The notable exception is the recent release of documents pertaining to the supervision of banks engaged in or seeking to engage in cryptocurrency / digital assets.13 The document release pertains to a lawsuit filed by Coinbase against the FDIC and SEC and related Freedom of Information Act (FOIA) request for information on purported de-banking in the digital asset ecosystem.
Another exception is a recent speech on stablecoins by Federal Reserve Governor Christopher Waller at an industry conference where he stressed the importance of tractable business models in addition to digital asset use cases.14
Digital Asset Custody
At the Bitcoin 2024 Conference, President Trump announced the potential of a ‘Strategic Bitcoin Reserve’ (SBR).15 Similar reserves are receiving interest at the state level, with over 16 states considering active legislation to put public money into digital assets.16 Besides the speculative price impacts of such a move, these measures could serve as a catalyst for digital asset custody.
Perhaps the most consequential event for digital asset custody came recently from the SEC, when it issued Staff Accounting Bulletin (SAB) 122, which rescinds previous accounting guidance for crypto under SAB 121.17 SAB 121 suggested that financial institutions must reflect client-owned crypto assets on their balance sheets. This has the effect of grossing-up a custody firm’s balance sheet and therefore subjecting those assets and liabilities to various leverage and capital requirements.
The SEC had cited technological, legal, and regulatory risks as driving the need for such treatment, but the now-rescinded guidance created significant challenges for digital asset custody firms including prohibitive capital requirements and potential bankruptcy ambiguity.18
The changes to SAB 121 could drive significant momentum for financial institutions to launch digital asset custody services. Capco has written previously about the opportunity for trusted providers to enter the digital asset market following the FTX collapse, including studies showing that 70% of Bitcoin holders would switch their primary bank to one that offered digital asset services.19
Although most traditional finance offerings are still in the early stages and have yet to achieve mainstream adoption, the combination of regulatory clarity and lower barriers around custody could drive rapid progress.
The Path Forward
While there has been a flurry of activity over these past weeks, it will take time for legislation and regulation to be put in place. It is also important to recognize that the digital asset ecosystem is vast and there will necessarily be some aspects of digital finance (e.g. stablecoins) prioritized over others.
However, the direction of travel is clear, at least for the next few years. Traditional finance firms that maintained their digital asset initiatives will have a significant go-to-market advantage over firms that had refocused on other priorities. These firms will face strategic buy vs. build choices, and it is plausible that M&A activity will pick up between traditional finance and crypto-native firms.
1 https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/
2 https://www.whitehouse.gov/fact-sheets/2025/01/fact-sheet-executive-order-to-establish-united-states-leadership-in-digital-financial-technology/
3 https://www.lummis.senate.gov/press-releases/lummis-to-chair-historic-senate-panel-on-digital-assets/
4 https://cointelegraph.com/news/republican-lawmakers-crypto-working-group
5 https://www.coindesk.com/opinion/2025/02/13/why-congress-needs-to-act-on-digital-assets
6 https://www.hagerty.senate.gov/wp-content/uploads/2025/02/GENIUS-Act.pdf
7 https://files.constantcontact.com/9f2b5e3d701/6c1f8aa0-095c-4a22-9982-2f4380d0b531.pdf
8 https://democrats-financialservices.house.gov/uploadedfiles/02.10.25_stable_2024_xml_12.3.24.pdf
9 https://www.sec.gov/newsroom/press-releases/2025-30
10 https://www.sec.gov/newsroom/speeches-statements/peirce-journey-begins-020425
11 https://www.cftc.gov/PressRoom/PressReleases/9049-25
12 https://www.cftc.gov/PressRoom/PressReleases/9037-25
13 https://www.fdic.gov/news/speeches/2025/fdic-releases-documents-related-supervision-crypto-related-activities
14 https://www.federalreserve.gov/newsevents/speech/waller20250212a.htm
15 https://www.wired.com/story/donald-trump-strategic-bitcoin-stockpile-bitcoin-2024/
16 https://www.coindesk.com/news-analysis/2025/02/03/u-s-bitcoin-reserve-may-be-coming-but-states-are-winning-the-race
17 https://www.sec.gov/rules-regulations/staff-guidance/staff-accounting-bulletins/staff-accounting-bulletin-122
18 https://www.hklaw.com/-/media/files/insights/publications/2022/06/law360--sec-reporting-guidance-poses-challenges-for-cryptoassets.pdf?la=es
19 https://www.finextra.com/blogposting/23898/how-ftx-strengthens-the-case-for-traditional-fis-to-provide-crypto-custody-for-retail-customers
