President Donald Trump has indeed signed an executive order aimed at reducing cryptocurrency regulations, particularly those affecting banks, as part of his broader pro-crypto policy agenda. On January 23, 2025, Trump issued the executive order titled “Strengthening American Leadership in Digital Financial Technology,” which addresses several aspects of digital asset regulation, including banking services for crypto companies. This action fulfills campaign promises to create a more favorable regulatory environment for the cryptocurrency industry, which faced significant scrutiny and enforcement actions under the previous Biden administration.
A key component of the executive order is its directive to protect and promote “fair and open access to banking services” for law-abiding individuals and private entities in the crypto sector. This addresses long-standing industry complaints about “Operation Choke Point 2.0,” a term used by crypto advocates to describe what they perceive as a deliberate effort by regulators to pressure banks into denying services to crypto companies.
The order does not explicitly terminate this alleged policy but signals a shift toward ensuring that crypto firms can access banking services without undue restriction. This is particularly significant for banks, as it could encourage them to custody digital assets, offer crypto-related services, and integrate cryptocurrencies into their portfolios, activities that were previously constrained by regulatory guidance.
One specific regulatory rollback highlighted in the executive order’s implementation is the rescission of the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121), announced on the same day the order was signed.
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SAB 121, issued in 2022, required banks and other custodians to record digital assets held on behalf of clients as both assets and liabilities on their balance sheets, effectively making it prohibitively expensive for many institutions to engage in crypto custody services. The rollback of this guidance, as directed by Trump’s order, is expected to lower the cost of compliance for banks, thereby encouraging greater participation in the crypto market. Industry leaders, such as Circle CEO Jeremy Allaire, have publicly supported this repeal, arguing that it removes a significant barrier to banks holding digital assets.
The executive order also establishes the President’s Working Group on Digital Asset Markets, chaired by Trump’s appointed crypto and AI czar, David Sacks. This working group, comprising key agencies like the Department of the Treasury, the Department of Justice, and the SEC, is tasked with proposing a comprehensive federal regulatory framework for digital assets within 180 days. Within 30 days of the order, the group must identify existing regulations affecting the crypto sector, and within 60 days, it must recommend whether these should be rescinded, modified, or adopted.
This framework aims to provide regulatory clarity, particularly for banks, by establishing “well-defined jurisdictional regulatory boundaries” and ensuring “technology-neutral regulations.” Such clarity could further reduce barriers for banks, enabling them to offer crypto trading, custody, and investment services to clients, including wealthy individuals and institutional investors.
The potential impact on banks is significant.
Bank of America CEO Brian Moynihan, speaking at the World Economic Forum in Davos, indicated that if the new rules make crypto a viable business, banks would actively participate, particularly in transactional services, treating crypto as “just another form of payment.” This shift could widen crypto adoption, bringing more institutional players into the market and increasing liquidity. However, the executive order’s approach to reducing regulations raises concerns about investor protection and systemic risks.
Critics argue that easing banking restrictions without robust safeguards could expose the financial system to the volatility and fraud risks inherent in the crypto market, as evidenced by past scandals like FTX and Binance. The order’s focus on deregulation, combined with the Trump administration’s broader appointment of crypto-friendly regulators—such as Paul Atkins at the SEC, Travis Hill at the FDIC, and Scott Bessent at the Treasury—suggests a potential prioritization of industry growth over consumer safety.
While this ban supports private sector cryptocurrencies by eliminating potential competition, it could limit the U.S.’s ability to innovate in digital finance and maintain the dollar’s global dominance, especially if other nations adopt CBDCs for cross-border transactions. The order instead promotes dollar-backed stablecoins, which could benefit banks by providing a regulated avenue for crypto-related services, but this approach may not fully address the systemic risks associated with stablecoins, such as those seen in the collapse of TerraUSD.
Trump’s executive order reduces cryptocurrency regulations on banks by rescinding restrictive guidance like SAB 121, promoting banking access for crypto firms, and tasking a working group with creating a broader regulatory framework. While this could significantly boost crypto adoption and institutional participation, it also raises concerns about investor protection, financial stability, and potential conflicts of interest, particularly given the administration’s close ties to the crypto industry.
