When it comes to the crypto industry, President Trump means business. He has already issued an executive order to stop some banking challenges for crypto and Web3 companies. This excluded the Fed and the FDIC, and a new working group was formed to produce clearer crypto rules.
The working group on digital asset markets is entrusted with determining how to boost US leadership in the crypto business. In addition, it is expected to evaluate the creation of a strategic national digital assets stockpile.
🚨THIS IS BIG: Trump’s #crypto executive order EXCLUDES the Fed & FDIC from the digital asset working group. Both tried to kill the industry thru #debanking & especially targeted my company, @custodiabank. Both belong on the outside. Nature is healing.🙏https://t.co/lghXWkYDuC
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) January 23, 2025
This is a big win for the crypto industry. Here’s why. Caitlin Long, founder and CEO of Custodia Bank, wrote, “Trump’s crypto executive order excludes the Fed & FDIC from the digital asset working group. Both tried to kill the industry through debanking & especially targeted my company, Custodia Bank. Both belong on the outside.”
How debanking has affected the crypto industry
The term gained popularity recently after venture capitalist Marc Andreessen spoke about it last month. He accused Democrats of pressuring banks to refuse business with crypto start-ups. He said approximately 30 founders of crypto and other companies had been quietly debanked.
Tesla founder Elon Musk posted about debanking to his social media platform X. This prompted crypto executives to chime in. Brian Armstrong, the co-founder and CEO of Coinbase, confirmed that the claim is accurate. He said, “It was one of the most unethical and un-American things that happened in the Biden administration, and my guess is that we will find Elizabeth Warren’s fingertips all over it.”
Can confirm this is true. It was one of the most unethical and un-American things that happened in the Biden administration, and my guess is we'll find Elizabeth Warren's fingerprints all over it (Biden himself was probably unaware).
We're still collecting documents via FOIA… https://t.co/2Rda7VU9MT
— Brian Armstrong (@brian_armstrong) November 27, 2024
In addition, Coinbase filed a lawsuit against the Securities and Exchange Commission (SEC) and the FDIC. The digital currency company alleged that financial regulators had prevented the crypto industry from accessing banking services.
David Marcus, who used to lead Facebook’s Libra/Diem project, also has a testament. He said that U.S. Treasury Secretary Janet Yellen reportedly urged FED Chair Jerome Powell to convince banks not to support the project.
That is not all. Nick Neuman, the CEO of Casa, shared his story about being taken off the bank’s services by Silicon Valley Bank. His company provides self-custodial services and was turned down by almost 50 banks before finally partnering with one.
Was this political? Well, crypto has not always been a favorite of politicians. A senior economic adviser, John Tamny, said, ” So long as politicians are picking favorites, banks will protect their shareholders by not getting on the bad side of politicians.” Also, corrupt political actors de-bank people and entities. They do this by abusing Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) regulations.
The US central bank is no longer involved in stablecoin policy
Trump’s new executive order states that upcoming US stablecoin laws will not be controlled by the central bank. Caitlin Long said, “Pretty incredible that the US central bank has been frozen out of stablecoin policy making. I believe this means Scott Bessent (as Treasury Secretary) will be firmly in charge of it.”
This is why. Clearly, the regulatory framework for banks is not suitable for stablecoin regulation. Issuers of stablecoins that are fully backed should not be regarded as fractional reserve banks. The “financial stability” concerns that have caused regulators to consider bank-like regulations for stablecoins are misplaced.
Stablecoin issuers offer payment instruments, not banking services. The primary risk associated with a stablecoin is that it will lose its 1:1 redeemability with the asset to which it is pegged. This is because the issuer doesn’t have the reserves it claims to.
Basic requirements around collateral and disclosures subject to anti-fraud authority would directly address this. Other regulators, including those more familiar with disclosure-based regulation, are better suited to oversee such a regime.
Stablecoins offer the promise of faster, cheaper digital payments. However, a Fed-heavy regulatory regime places private stablecoins at a disadvantage. This hinders this innovative technology’s potential.
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