President Donald Trump has issued an executive order, “Strengthening American Leadership in Digital Financial Technology,” prohibiting the development of central bank digital currencies (CBDCs) in the U.S. The order defines CBDCs as digital money directly tied to the central bank and forbids any government agency from creating or promoting them, halting ongoing projects unless legally authorized.
The order raises concerns about CBDCs posing risks to privacy, financial independence, and economic stability, viewing them as tools of centralized control that conflict with the decentralization principles of cryptocurrencies like Bitcoin. This move aims to protect individual financial privacy and uphold a free-market approach to digital finance, contrasting with global trends where countries like China and India are exploring CBDCs.
Instead of CBDCs, the order promotes a private sector-led digital asset ecosystem, highlighting lawful dollar-backed stablecoins as viable alternatives. It defines digital assets as values recorded on a distributed ledger, including cryptocurrencies and digital tokens, aligning with Trump’s campaign promises to oppose CBDCs and support cryptocurrency decentralization.
The executive order establishes a presidential working group to create a federal regulatory framework for digital assets, focusing on market structure, oversight, consumer protection, and risk management.
It also proposes a national digital asset reserve, which the group will evaluate, potentially using lawfully confiscated digital assets. This initiative may realize former President Trump’s idea of a strategic Bitcoin reserve, as discussed at the Bitcoin 2024 Conference. Currently, the U.S. government holds 198,109 Bitcoin, valued at over $20.1 billion, mainly seized from illegal activities.
