Trump rains on BTC maxi parade with ‘digital asset stockpile’ order

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Day Four of Donald Trump’s presidency finally brought his first crypto-specific executive order, although it landed far short of what the BTC maximalists hoped for.

• Executive Order
• Crypto Council makeup, but no mention of BTC
• Crypto Bros blame game starts in earnest
• China isn’t interested in fighting a BTC Cold War
• Trump rails against debanking
• SEC/CFTC shuffle their ranks

On January 23, U.S. President Trump issued an executive order titled ‘Strengthening American Leadership in Digital Financial Technology.’ The document sketches out some broad strokes for how Trump’s administration will address all things blockchain over the next four years.

In a video from the Oval Office, Trump signed the order alongside tech investor David Sacks, Trump’s new ‘AI & Crypto Czar.’ Informed that the order had to do with crypto, Trump said, “Which is really going up, right?” Sacks concurred, although he didn’t have his phone in his hand, so he couldn’t see the minute-by-minute price action. (Foreshadowing alert.)

Showing the pool reporters the signed document, Trump asked if they found it exciting. Trump acknowledged that they might not, but added, “they’re going to make a lot of money for the country. And so is David.”

The list of goals in Trump’s EO starts with a pledge to protect and promote “the ability to develop and deploy software, to participate in mining and validating, to transact with other persons without unlawful censorship, and to maintain self-custody of digital assets.”

(The ‘validating’ reference could be a nod to the Ethereum network’s proof-of-stake (PoS) consensus mechanism. Trump’s decentralized finance (DeFi) project World Liberty Financial (WLF) operates on Ethereum, although ‘operate’ may be a stretch since all it’s done to date is sell a ‘governance’ token. WLF also recently purchased another $47 million worth of Ethereum’s ETH token, bringing its total ETH holdings to nearly $180 million.)

To shore up the U.S. dollar, Trump will “promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide.” On a related note, Trump vowed to prohibit anything to do with a U.S. central bank digital currency (CBDC) and ordered any domestic plans regarding CBDCs to be “immediately terminated.”

Trump pledged to ensure “open access to banking services,” a nod to the Operation Choke Point 2.0 conspiracy theory that claims federal banking watchdogs ordered banks to ‘debank’ crypto operators.

Trump will ensure “regulatory clarity and certainty built on technology-neutral regulations, frameworks that account for emerging technologies, transparent decision making, and well-defined jurisdictional regulatory boundaries, all of which are essential to supporting a vibrant and inclusive digital economy and innovation in digital assets, permissionless blockchains, and distributed ledger technologies.”

The EO also revokes/rescinds all crypto-related EOs issued under Trump’s predecessor, Joe Biden, along with two Treasury Department digital asset framework documents from 2022. The SEC immediately complied, revoking the SAB 121 bulletin that crypto bros blamed for deterring banks from custodying digital assets.

Crypto council to mull a non-BTC stockpile

As for the new President’s Working Group on Digital Assets (aka ‘crypto council’), Trump revealed that it will be a subset of the National Economic Council. As previously reported, Sacks will chair this council, with failed Congressional candidate/memecoin issuer Bo Hines as vice-chair.

The group will include multiple cabinet members, including his nominees for Treasury secretary (Scott Bessent), attorney general (Pam Bondi), Commerce secretary (Howard Lutnick), boss of Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX) and part-owner of controversial market-leading stablecoin issuer Tether), Homeland Security secretary (Kristi Noem) and the director of Office of Management and Budget (Russell Vought).

Space will be held for the new chairs of the Securities and Exchange Commission (SEC) and Commodity and Futures Trading Commission (CFTC), plus several others. However, no one from the Federal Reserve or Federal Deposit Insurance Corporation (FDIC)—the latter allegedly the Choke Point villains—appears to be welcome at this table.  

While the order allows for other government figures to attend group meetings, it didn’t name any private sector representatives nor even suggested they’d be welcomed on a temporary basis, despite previous reports that top execs of crypto firms would have seats at the table.

Regardless, the group is tasked with proposing “a Federal regulatory framework governing the issuance and operation of digital assets, including stablecoins.”

The group will also be given 180 days in which to recommend “regulatory and legislative proposals” on several subjects, including an instruction to “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.”

There are a lot of weasel words in that statement, but it notably doesn’t specify ‘Bitcoin/BTC’ in terms of what might constitute this stockpile. This adds weight to last week’s New York Post report that Trump was mulling a stockpile consisting of BTC as well as “digital coins founded in the U.S., like Solana, [USDC] and Ripple’s XRP.”

For all we know, Trump’s council will recommend that the digital assets in America’s new ‘stockpile’ will include his new $TRUMP memecoin. It could use the boost, as its fiat price fell by about 10% to below $35 following his EO.

During his 2024 election campaign, Trump pledged to establish a ‘strategic BTC stockpile,’ preventing the government from selling any BTC tokens the Department of Justice (DoJ) has seized over the years.

BTC maximalists lobbied Trump hard to establish an even grander ‘strategic BTC reserve’ (SBR) that would involve the government using taxpayer funds to acquire up to one million additional tokens. However, Trump appears to be resisting this siren song, and his EO offers no guarantees that ANY action will be taken on this front.

Worse, recent weeks have seen the Department of Justice signal its intention to sell ~ 164,000 of the 200,000+ BTC tokens currently in its possession. With Trump’s council having a 180-day window in which to write this stockpile proposal and months more for Congress to pass the necessary legislation, there’s the distinct possibility there will be little BTC left in the cupboard to stockpile.

Having waited with bated breath all week for Trump to announce a BTC boondoggle, crypto bros reacted to Trump’s executive order by sending BTC’s fiat price sharply downward, falling from nearly $106,000 to below $103,000 in the course of a few minutes. The token slowly inched upward as BTC maximalists picked themselves up off the floor and considered their new reality, but they were promised jet packs, and this definitely isn’t that.

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Bro-on-bro warfare

BTC maximalists’ reaction to Trump’s EO was mixed, with MicroStrategy (NASDAQ: MSTR) founder Michael Saylor—who now owns over 2% of all the BTC that will ever exist—tweeting a declaration that the “Crypto Renaissance has officially begun.” Note: crypto is having a renaissance, while BTC is apparently still stuck in the Dark Ages.

In the hours preceding Trump’s EO, some stakeholders started tearing strips off each other, previewing what promises to be a major rift in CryptoVille. Pierre Rochard, VP of research at mining outfit Riot Platforms (NASDAQ: RIOT), took to his X account early on January 23 to call out XRP-issuer Ripple Labs for the delays in Trump’s SBR announcement.

Rochard called Ripple “[t]he biggest obstacle” for an SBR, accusing Ripple management of “aggressively lobbying against the SBR by throwing around $millions at politicians, desperately trying to derail it.” Ripple’s alleged goal is to “protect their marketing narratives and push for CBDC’s built on their platform.”

Ripple CEO Brad Garlinghouse wasn’t about to take this lying down, telling Rochard that Ripple’s “efforts are actually INCREASING the likelihood of a crypto strategic reserve (which includes bitcoin) happening.”

The Post claimed Trump was steered down the ‘digital assets, possibly including BTC’ path following discussions with execs backing these tokens. On January 7, Garlinghouse tweeted a photo of himself with his chief legal officer and the then president-elect at his Mar-a-Lago resort in Florida.

Following Trump’s EO, Rochard got in one parting shot, saying, “Trump should create the XRP stockpile by seizing it from Ripple. They lobbied for it!” Garlinghouse has yet to reply, apparently too drunk with power to toy with BTC maxis.

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China isn’t playing this game

Many of those advocating the loudest for Trump to create the SBR framed it as a crucial element for winning a new cold war. As Coinbase (NASDAQ: COIN) CEO Brian Armstrong recently declared, “The next global arms race will be in the digital economy, not space.”

These armchair geopolitical strategists point to China as America’s fiercest foe in this (allegedly) existential struggle, knowing how much Trump loathes the idea of China besting him. But what if China doesn’t give a damn who wins this race?

On January 22, CryptoQuant CEO Ki Young Ju claimed that China had sold 194,000 BTC tokens seized in 2019 during its prosecution of individuals involved in the PlusToken scam. While China said at the time that it had transferred the tokens “to the national treasury,” Ki opined that “a censored regime holding censorship-resistant money feels unlikely.”

Ki claimed the tokens were first sent to coin-mixing services the same year they were seized. The tokens that emerged were sent to digital asset exchanges, where they were presumably sold for cash. Blockchain researchers concurred with Ki’s analysis, noting the steady decline in the identified PlusToken reserve during the second half of 2019.

At the time, those tokens were worth a fraction of their current value, meaning China missed out on the price appreciation of the past five years. However, it also means the U.S. is already well out of any other nation in terms of the number of BTC tokens under its control, which takes much of the urgency out of the argument for America acquiring even more BTC.

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WEF WTF

Trump didn’t attend this year’s World Economic Forum (WEF) event in Davos, Switzerland, but on January 23, he gave a virtual speech (before issuing his EO) and took questions from a select panel of banking bigwigs.

Trump’s sole direct reference to digital assets came during his speech, as he pledged to boost domestic energy production, which will (allegedly) make America “the world capital of artificial intelligence and crypto.”

However, in response to a question from Bank of America CEO Brian Moynihan, Trump made an indirect reference to the crypto sector’s Choke Point allegations.

Directly addressing Moynihan, Trump said, “I hope you start opening your bank to conservatives. Because many conservatives complain that the banks are not allowing them to do business within the bank. And that included a place called Bank of America. They don’t take conservative business. And I don’t know if the regulators mandated that because of Biden or what, but you and Jamie [Dimon of JPMorgan Chase) and everybody, I hope you’re going to open your banks to conservatives, because what you’re doing is wrong.”

Senate/House moves

BTC did briefly spike above $106,000 early Thursday before Trump’s WEF appearance. The apparent catalyst was Sen. Cynthia Lummis (R-WY), the biggest proponent of an SBR in Congress, who tweeted a cryptic announcement about “Big things are coming.”

BTC lost much of those gains when the ‘big thing’ turned out to be Lummis being confirmed as chair of the Senate Banking Committee’s new Subcommittee on Digital Assets. The seeming fakeout of teasing what was largely a foregone conclusion led some observers to accuse Lummis of “market manipulation.”

Lummis said she’d use her new position to “urgently pass bipartisan legislation establishing a comprehensive legal framework for digital assets and that strengthens the U.S. dollar with a strategic [BTC] reserve.” Given the specifics of Trump’s EO, good luck with that.

Lummis was among the senators joining Sen. Ted Cruz (R-TX) in sponsoring a joint resolution that would overturn the Internal Revenue Service’s recently enacted rule labeling DeFi platforms—including decentralized exchanges (DEX)—as ‘brokers.’ That designation requires DeFi platforms to report digital asset transactions to the IRS for tax purposes.

Co-sponsor Rep. Mike Carey (R-OH) said the new rule, if enforced, “will result in a tidal wave of new digital asset returns, overwhelming IRS resources.” The rule will also allegedly “drive American cryptocurrency innovation overseas.”

Over in the House of Representatives, Democrats have named Rep. Don Davis (D-NC) as the ranking member of the House Agriculture Committee’s new Subcommittee on Commodity Markets, Digital Assets, and Rural Development. Davis holds an ‘A’ rating from the Coinbase-funded Stand With Crypto astroturf group as someone who “strongly supports crypto.”

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CFTC shuffles its deck

The Ag Committee has oversight of the CFTC, which is expected to be assigned primary responsibility for overseeing digital assets (assuming past legislation on this issue will be reintroduced in the current session).

CFTC commissioner Caroline Pham was named acting chair of the regulator on January 20 and gave a speech the following day in which she declared that the CFTC would “refocus and change direction with new leadership to fulfill our statutory mandate to promote responsible innovation and fair competition in our markets that have continually evolved over the decades. It’s time for the CFTC to get back to the basics.”

On January 22, Pham announced some leadership changes, including naming her acting chief of staff, Harry Jung, as the new leader of “the CFTC’s engagement on crypto, decentralized finance (DeFi), and other digital assets, building upon his work in this space as the Designated Federal Officer of the CFTC’s Global Markets Advisory Committee.”

Pham also appointed Brian Young as head of the CFTC’s enforcement division. The CFTC reported a record $17.1 billion in monetary relief in its most recent fiscal year, most of which came via the resolution of the FTX debacle and the settlement of the Binance exchange’s long-running defiance of U.S. law.

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