The Crypto Space Under The New Trump Administration

The Crypto Space Under The New Trump Administration

Autor: Sergi Barberán

Observatorio de Divulgación Financiera
Instituto de Estudios Financieros
Junio 2025
Depósito legal: B 21662-2012

Regulatory Framework

As of 2025, the United States still lacks a clear regulatory framework for cryptocurrencies and digital assets. Experts highlight the difficulties in defining the nature of these assets –which are not a homogeneous asset class themselves– as the primary reason for this regulatory uncertainty. Cryptocurrencies exhibit characteristics of both securities and commodities, with each asset class being regulated by a different agency under U.S. law. The Securities and Exchanges Commission (SEC) is responsible for overseeing securities, while the Commodity Futures Trading Commission (CFTC) regulates commodities. This dual supervision together with an unclear definition of the category creates confusion and has complicated the development of a unified regulatory approach for the crypto space.

The SEC uses the so-called Howey Test to determine whether an investment contract qualifies as a security. The test has been in place since 1946 and defines a security as “any contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party”. This includes equities and bonds, among others. On the other hand, the CFTC defines commodities with a more generic approach as “all services, rights, and interests […] in which contracts for future delivery are presently or in the future dealt in”, covering not only traditional commodities but also currencies.

Bitcoin, the world’s most popular and more highly valued cryptocurrency, offers a clear example of the difficulties involved in classifying it as an asset class due to its mixed features. Investment in Bitcoin requires a monetary disbursement with the aim of making a profit. However, it does not necessarily follow the common enterprise structure –coins may be purchased directly, without the need for any pooled investment vehicle– and there is no promoter or third party responsible for any potential future profits the investor may earn. In this sense, Bitcoin would not pass the Howey test and would, therefore, be best defined as a commodity. However, because Bitcoin’s design characteristics are different from those of other cryptocurrencies, the issue requires a case-by-case approach.

In the absence of clear guidance or regulation, each agency has taken proactive steps to assert its supervisory oversight on the topic. In December 2020, the SEC filed a lawsuit against Ripple Labs, the issuer of the popular Ripple (XRP) coin, accusing the company of conducting an unregistered Initial Public Offering (IPO). In 2024, the agency issued a formal warning to Uniswap Labs, the firm behind a decentralized exchange, claiming they were operating as an unregistered broker and exchange. On its side, the CFTC filed a lawsuit against Binance, one of the world’s largest crypto exchanges in 2023 for violating the U.S. derivatives law. The agency also played a significant role in the legal proceedings against the collapsed FTX exchange in late 2022.

In an attempt to start clarifying the regulatory framework, President Biden issued Executive Order 14067 (“Ensuring Responsible Development of Digital Assets”) in March 2022. The order encouraged multiple U.S. government agencies to submit reports and recommendations regarding the regulation of the crypto space, with a focus on financial stability and the protection of retail investors. However, the document lacked specific policy recommendations and resulted in no further actions or developments regarding regulation of the sector.

1.1. David Sacks, the White House Crypto Czar

Recognizing the potential risk of the U.S. crypto space falling behind other regions due to the lack of a clear regulatory framework, President Trump announced in December 2024 that David Sacks would serve as the White House Crypto Czar. Sacks, a 52-year-old venture capitalist linked to the so-called PayPal Mafia–a group of now-billionaires who worked at PayPal in the early 2000s– has a track record as an angel investor in megacap tech companies such as Facebook, Uber or Airbnb through his firm, Craft Ventures. He is also widely regarded as a beacon for techno-libertarian ideas alongside venture-capitalist and Palantir Chairman Peter Thiel, and has been repeatedly vocal on the need for a lighter and more defined regulatory environment for the U.S. crypto space.

To enhance regulatory clarity, Sacks’ main goal is to get the Financial Innovation and Technology for the 21st Century Act (FIT21) passed. The bill was introduced by Representative Glenn Thompson in mid-2023 and was approved by the House of Representatives in 2024 with ample bipartisan support. FIT21 seeks to resolve the ongoing regulatory conflict by clearly defining which agency oversees which type of asset. Under the bill, assets are classified either as restricted digital assets or as digital commodities. Restricted digital assets, such as tokenized assets, lack a decentralized blockchain and will fall under the SEC’s jurisdiction. In contrast, digital commodities, like Bitcoin, operate on decentralized blockchains and will be overseen by the CFTC. With Senate approval likely coming soon, FIT21 would resolve the regulatory uncertainty and establish a clear legal framework for the crypto space going forward.

Sacks’s efforts have also been focused on reverting the previous Administration’s crypto-skeptical stance. Just weeks after the November election, SEC Chair Gary Gensler –widely unpopular among the crypto community– announced his resignation. President Trump immediately nominated Paul Atkins, who had already served as SEC Chair from 2002 to 2008 and is known for his deregulatory approach. In February 2025, the SEC moved to settle several outstanding enforcement actions against crypto projects, including the highly symbolic ones against UniSwap and Ripple Labs. In addition, the agency issued Accounting Bulletin 122, which revoked prior guidance requiring U.S. financial institutions to treat the full value of customers’ crypto assets as liabilities¹–a requirement that had discouraged banks from offering crypto-related services due to high balance sheet and reporting costs.

Digital Asset Reserve

After expressing strong skepticism during his first term—describing cryptocurrencies as “not money” and their value as “highly volatile and based on thin air”—President Trump publicly shifted his stance at the Bitcoin Summer 2024 conference in Nashville, Tennessee during his presidential campaign. In his keynote address, he publicly endorsed the idea of building a strategic Bitcoin reserve and claimed he would make the United States the crypto capital of the world, as well as promising to fire SEC Chair Gary Gensler if elected President.

The concept of stockpiling strategic assets is not new to the U.S. Government, with the Strategic Petroleum Reserve (SPR) being perhaps the most prominent example. Following the 1973 Yom Kippur war between Israel and several Arab nations, OPEC imposed an oil embargo on the United States in response to its support for Israel. The measure caused prices to rapidly surge and activity to drop, pushing the oil-intensive U.S. economy into stagflation and disrupting the post-World War II growth trend. As a reaction, Congress passed the Energy Policy and Conservation Act in 1975 against future oil supply disruptions. The legislation mandated the federal government to accumulate up to 1 billion barrels of oil. Although that figure has never been reached, the United States began purchasing crude on the open market and has kept a reserve equivalent to about 20 days of U.S. oil consumption since. Initially devised as a defensive measure, the SPR has been used in times of market stress to stabilize oil prices globally, particularly after the Russian invasion of Ukraine in early 2022.

2.1. Senator Lummis’ BITCOIN Act

Partly inspired by the rationale and existence of the Strategic Petroleum Reserve, just days after President Trump’s “crypto capital of the world” speech in Nashville, Republican Senator Cynthia Lummis introduced the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024 (abbreviated BITCOIN Act). The bill proposed creating a national Bitcoin reserve through the acquisition of 1,000,000 BTC—roughly 5% of the total eventual supply of 21 million coins—to be held under custody of the U.S. Treasury.

Under Senator Lummis’ proposal, the Bitcoin purchases would be conducted over 5 years, with 200,000 BTC being acquired annually. The assets would not be sold for at least 20 years following purchase, except if required for federal debt redemption. Even after this lockup period, any sales would be capped at 10% of the total holdings in any 2-year window. The bill also includes “proof-of-reserve” provisions intended to verify actual ownership of the assets on a quarterly basis, an element largely influenced by recent skepticism—particularly among Republican voters—surrounding the true status of the gold reserves the U.S. Treasury holds at Fort Knox.

From a market perspective, the bill faces two key challenges. A rapid calculation based on the BTC price at the time of the bill’s introduction (Bitcoin traded at about $60,000 in July 2024) suggests that purchasing 200,000 coins per year would cost the Treasury—and the American taxpayer—around 12 billion dollars annually, an amount comparable to the State of New York’s education budget, and which could rise if BTC prices increase over time. To mitigate the financial burden of the proposal, the bill outlines several funding strategies, with the revaluation of gold certificates being the most notable.

Prior to Executive Order 6102 in 1933, U.S. citizens could use gold certificates, gold-backed bills that made transactions more efficient than carrying actual gold coins. Following the Order, people were required to hand their gold holdings to the U.S. Treasury, which then distributed the gold across various Federal Reserve Banks and issued a new form of gold certificates to reflect their newly granted gold possessions. These certificates were valued at the statutory gold price of $42.29 per troy ounce, far from the current market price of around $3,000 per ounce. Revaluing these certificates would yield a multi-billion dollar gain, easily offsetting the entire cost of the proposed BTC purchase program.

2.2. President Trump’s Executive Order

Expectations were high within the crypto community for the first batch of executive orders to be signed by President Trump following his inauguration on January 20th, 2025, with many expecting an immediate creation of the Bitcoin reserve. However, the initial crypto-related signed order merely established David Sacks’ role as Crypto Czar and created a working group within the U.S. Government to focus on digital assets. It was not until March 6th that President Trump signed the Strategic Bitcoin Reserve Executive Order (officially, “Establishment Of The Strategic Bitcoin Reserve And United States Digital Asset Stockpile”).

The order was surrounded by significant controversy, following a post by President Trump on his social network Truth Social just days earlier, where he specifically named currencies to be included in the strategic reserve alongside Bitcoin, including Ethereum, Ripple, Solana, and Cardano. These coins saw substantial price increases in response to the news, only to experience sharp declines after not being explicitly named in the final document. The executive order ultimately focused on establishing two separate strategic reserves: one for Bitcoin and another for unspecified non-Bitcoin digital assets.

Contrary to Senator Lummis’s proposal and much of the speculation within the crypto world, both reserves are to be filled exclusively with digital assets forfeited from criminal cases and already under the Treasury’s control, rather than through new market purchases. This decision somewhat limits the expected initial size and impact of the order, with the aim of keeping the creation of the reserve neutral for U.S. taxpayers. Nonetheless, both the Secretary of the Treasury and the Secretary of Commerce are encouraged to propose budget-neutral acquisition strategies over time, which could be similar to those presented in the aforementioned BITCOIN Act.

The White House estimates that current Bitcoin holdings from criminal operations exceed 200,000 coins, with a market value of around $18 billion. The order specifies that the Bitcoin holdings will not be sold, but other digital assets may be sold upon recommendation by the Treasury.

Despite falling short of initial expectations—particularly when compared to Senator Lummis’ BITCOIN Act—President Trump’s order remains highly significant. While other countries, including El Salvador under President Bukele, have built notable Bitcoin reserves, none has granted the asset an explicit “strategic” designation, placing it on par with traditional, widely-accepted commodities such as oil or gold. While the full market implications and adoption impact outcomes are only likely to materialize over time, the Strategic Bitcoin Reserve solidifies official recognition of Bitcoin and marks the most legitimizing move yet for the emerging asset class.

Central Bank Digital Currencies

Cryptocurrencies are private forms of money competing for market acceptance, usually offering technological advantages over traditional fiat currencies like the euro or the U.S. dollar. These advantages mostly relate to lower transaction fees, faster settlement of large international payments, and safer storage features. In response to their rise, central banks around the world have started working on public equivalents—digital versions of national currencies backed by the full faith and credit of the government, commonly referred to as Central Bank Digital Currencies (CBDC).

From a technical viewpoint, CBDCs are digital coins with issuance, supply, and regulation managed by the central bank, typically coming under two main design forms. In account-based CBDCs, users access their coins through existing bank accounts linked to their identity. Token-based designs eliminate the need for intermediation, allowing users to transact simply using public and private key pairs. Specific design choices—such as enabling offline payments (useful in the event of a payment system failure) or ensuring a degree of privacy—cause most CBDCs to exhibit features from both approaches. These choices also determine how transaction records are maintained, whether through a centralized database or some form of blockchain technology.

From a financial system perspective, account-based CBDCs are equivalent to citizens depositing their savings directly with the central bank—an option reserved exclusively for commercial banks until now—while those with token-based features represent a modern cash equivalent. Depending on the design, CBDCs can erode the deposit base at the banking sector, which is a challenge for the transmission of monetary policy and for banks given the role of deposits as a relatively cheap and stable source of funding. Economically, both design forms can be seen as a new step in the evolution of money, like the transition from gold coins to paper bills or from passbooks to digital banking.

3.1. The Need for CBDCs

The current financial infrastructure and payment systems face at least two major limitations for which the development of CBDCs may provide a solution. Research shows lower-income segments of the population and remotely located communities, even in developed economies, suffer from financial exclusion, lacking access to basic financial services. Furthermore, cross-border transfers are still costly and usually take several days, with little improvement seen in recent decades.

CBDCs could be specifically designed to address both issues by leveraging an efficient, blockchain-based (or similar) payment system infrastructure, enabling almost real-time low-cost transfers (for reference, Bitcoin transactions take about an hour to settle, compared to up to 4 days for international transfers under SWIFT). They would also allow unbanked individuals to access financial services without the need for financial intermediaries, an especially valuable feature for people in remote or lower-income areas. Moreover, citizens from countries with fragile financial systems hold significant credit risk by depositing their savings in domestic banks and could potentially benefit from being able to directly access the central bank.

3.2. CBDCs in the World and in the United States

According to the CBDC Tracker by the Atlantic Council, as of 2025, 134 countries are exploring some form of CBDC-related initiative, with over 60 having either begun development or launched pilot programs. Three countries—Jamaica, Nigeria, and the Bahamas—have already fully implemented a CBDC. China stands out as the largest economy with a functioning digital currency (the e-yuan), albeit limited to test zones, primarily in large metropolitan areas. In Europe, the European Central Bank is expected to enter the Digital Euro’s pilot implementation phase in late 2025.

Graph 1. Number of CBDCs projects by current
status

Even before the Trump Administration, the United States had consistently ranked among the most delayed major countries in advancing a CBDC initiative. It was not until 2020 that the Federal Reserve, together with other Western central banks, co-authored a research paper for the Bank of International Settlements (BIS) on the foundational principles for CBDCs. Around the same time, it launched several research initiatives in collaboration with national universities. In 2021, while China was already piloting the e-yuan in some test regions, the Federal Reserve began collecting feedback from market and industry participants on the potential development of a digital U.S. dollar. The discussion paper was published in early 2022, with the title Money and Payments: The U.S. Dollar in the Age of Digital Transformation.

The Federal Reserve research highlighted several risks associated with a CBDC, including potential disintermediation by banks and malfunctioning of traditional monetary policy channels. Additional papers focusing on these issues followed throughout 2022. However, little interest by the general public (only 16% of Americans supported a CBDC, according to a 2023 YouGov poll) and little pressure by the Biden Administration, whose Executive Order 14067 merely encouraged further R&D, caused the initiative to lose momentum. As a result, no significant progress or new research followed.

3.3. Opposing CBDCs as a Libertarian Ideal

At its core, the crypto community has traditionally opposed CBDCs due to their public, mostly centralized nature, which contrasts with the libertarian ideals typical of early digital projects. As such, the topic presented a prime opportunity for President Trump’s campaign to appeal to a right-wing tech sector vital to securing his Republican nomination, while the general public remained largely indifferent. Months before fully committing to a pro-crypto stance, President Trump began campaigning against CBDCs, claiming he would ban the development of a digital U.S. dollar during a Fox interview in early 2024. He argued it would lead to “money suddenly disappearing from people’s bank accounts” and called it a threat to freedom.

This opposition to CBDCs proved to be a successful strategy to approach the crypto-libertarian community at low political cost with other constituencies, culminating in the signature of executive order “Strengthening American Leadership in Digital Financial Technology” on January 23rd, effectively banning the Federal Reserve from pursuing a digital version of the dollar.

After President Trump’s ban, CBDCs are likely to become the first area of international monetary policy and economics where the United States lacks not only leadership but even representation, potentially leaving the space open to European or Chinese leadership on the matter. While the reasons behind the dollar’s status as the global reserve currency are not based only on the technicalities of payment systems, the development of more efficient payment alternatives through CBDCs could undermine its current privileges. Furthermore, the potential reallocation of some international financial flows away from the U.S. Dollar on behalf of new CBDCs could weaken the United States’ political power, limiting the U.S. Treasury’s ability to sanction individuals and entities by freezing their access to their bank accounts (as it happened with Russian assets after the start of the Ukraine War in 2022), diminishing its global political influence².

Memecoins

On the eve of Inauguration Day, President Trump announced on Truth Social the launch of his own token, TRUMP, built on the Solana network. Many retail investors and crypto advocates rushed to buy the collectible, pushing the price to $70 shortly after its release before falling sharply to its current value of around $10. At its peak, TRUMP reached a market capitalization of approximately 27 billion U.S. dollars—effectively doubling President Trump’s net worth, as he was estimated to control 80% of the coin supply both directly and indirectly. Just hours later, a second post appeared announcing the launch of MELANIA, another token that briefly traded north of $12 with a market capitalization exceeding 12 billion U.S. dollars before also crashing by over 90% to its current value of $0.60.

These launches mark the latest chapter in the saga of memecoins, defined as cryptocurrencies holding some humorous characteristics, often coming from internet culture and social media, and typically associated with little to no intrinsic economic value. Although they represent a small fraction of the total crypto market capitalization, memecoins have become an unavoidable part of the ecosystem since its early days. While many remain comic in nature, they have been frequently linked to frauds and scandals. In recent years, pump-and-dump schemes involving memecoins have become common, with tokens having their prices artificially inflated through aggressive promotion on social media before early holders sell at the peak, leaving latecomers with heavy losses.

Some memecoins have gained significant popularity and mainstay, with Dogecoin being the clearest example. Created in 2013 by a group of software engineers as a dog-themed token, it became popular during Covid times after Tesla CEO Elon Musk started to publicly endorse it in several TV appearances, even suggesting Tesla could accept it for car payments. The meme’s cultural relevance reached new heights when news appeared that President Trump was considering a role for Musk in his Administration, in a unit aimed at reducing federal spending deliberately named DOGE (Department of Government Efficiency), the short-version of the popular coin name.

The TRUMP memecoin episode was historical in many respects. First, it marked the first time a public official openly launched and endorsed a memecoin of their own—being shortly followed by the LIBRA scandal involving Argentina’s President Milei. Second, it revealed how the new Administration planned to handle the memecoin phenomenon: by allowing them to trade freely or even encouraging their existence. This extreme “laissez-faire” approach was consolidated on February 27th, when the SEC issued a Staff Statement declaring memecoins now fall out of their regulatory oversight, leaving retail investors unprotected.

4.1. Memecoins as a threat to the crypto space

Memecoins present a challenge to the crypto space similar to the issues posed by fraudulent companies in traditional equity markets. By failing to identify them on time, regulators risk exposing uninformed retail investors (or informed ones with low risk aversion) to significant losses at the hands of fraudsters, which could ultimately erode public confidence in the broader market. In developed markets, stock exchanges have historically set listing requirements and self-regulations designed to protect investors. However, the lack of regulatory oversight in crypto markets makes it difficult to prevent such occurrences. Recent episodes, such as the TRUMP one, suggest that little will be done in the near future to supervise memecoins, leaving retail investors vulnerable to market volatility and potentially fraudulent products.

Graph 2. Memecoins and Bitcoin market
capitalization as % of total crypto market

The implications for the crypto space could be less severe than initially feared, though. Early evidence from price action suggests that investors have become more adept at identifying valuable assets, increasingly distancing themselves from fraudulent tokens. According to CoinMarketCap data, the total market capitalization of memecoins as a percentage of the overall crypto market has halved from approximately 3% in 2021 (during the peak of the NFT bubble) to 1.7% today, signalling that investors are increasingly able to discriminate across crypto projects and now place less value on these assets. Similarly, Bitcoin’s market capitalization—considered the soundest cryptocurrency—has grown from around 45% in 2021 of the total crypto space in 2021 to 60% today. If this trend extends into the future, it could signal a more mature market, where investors are less likely to be attracted by highly-speculative coins promoted by fraudsters.

Conclusion

The new Trump Administration is likely to mark a turning point in the brief history of the crypto space in the U.S. The appointment of a White House Crypto Czar signals a notable shift in attitude towards digital assets, following years of cautious approach by regulators and policymakers. By promoting the adoption of the FIT21 Act, the current Administration seeks to resolve the jurisdictional conflict between federal agencies and set the basis for a clearer and simplified regulatory framework. This new pro-crypto stance should help develop a still immature crypto space in the United States.

Moving towards a friendlier regulatory approach to digital assets is likely to come at the cost of little protection for retail investors. Recent actions by regulatory agencies—including the settlement of high-profile cases against major crypto projects and statements reducing their oversight universe—suggest a shift towards a more laissez faire stance, moving away from investor safeguarding. The TRUMP coin episode, launched by the President himself on the eve of Inauguration Day, further confirms limited interest by the Trump Administration in regulating the controversial memecoin phenomenon.

President Trump’s decision to create crypto asset strategic reserves marks the end of a decade-long struggle for legitimacy of the asset class. By effectively stockpiling Bitcoin and several other coins, the United States acknowledges their value and grants them formal recognition. The decision is likely to have network effects, encouraging foreign central banks—mostly reluctant until now—to begin diversifying a portion of their international reserves into digital assets. This could come at a time when the long-standing safe haven nature of the U.S. dollar is increasingly being called into question.

Embracing a libertarian approach to the matter, the Trump Administration has banned the Federal Reserve from developing a Central Bank Digital Currency of its own—a decision that could potentially backfire. By stepping back, the United States leaves room for other developed or developing economies to take the lead on this field. Should they succeed in creating a more efficient alternative to the dollar-based SWIFT system of payments, the privileged position of the U.S. dollar in international trade could be weakened over the medium term.

These early actions reflect the new Trump Administration’s intent to actively engage with the U.S. crypto space, shaping its domestic future with implications potentially reaching beyond the asset class itself.

Endnotes

1. Custodians typically do not report customers’ safeguarded assets as part of their balance sheets. However, Accounting Bulletin 121, issued in early 2022, required banks to recognise customers’ crypto asset deposits as liabilities on their balance sheets.
2. Some authors have pointed to stablecoins—a specific form of cryptocurrency whose value is pegged to another currency, typically the US dollar—as a potential private version of a US Central Bank Digital Currency that could indirectly support the dollar’s digitalization process. Recent remarks by senior members of the Trump Administration suggest a degree of tolerance for private sector alternatives to the digital dollar, which could compete with institutionally-led projects from Europe or China.

References

• Board of Governors of the Federal Reserve System. (2022). Money and payments: The U.S. dollar in the age of digital transformation.
• Atlantic Council. (2025). CBDC tracker.
• Wu, Z. (2024, July 15). A 2024 overview of the e-CNY: China’s digital yuan. Forbes.
• Cato Institute. (2023, May 24). New poll: Only 16% of Americans support U.S. adopting central bank digital currency; 68% would oppose. Cato Institute.
• CFA Institute. (2021). Survey report: The role of central bank digital currencies in the global economy.
• Board of Governors of the Federal Reserve System. (2022). The Federal Reserve’s monetary policy strategy: An economic analysis.
• U.S. Securities and Exchange Commission. (2023). Staff statement on meme coins.
• U.S. Securities and Exchange Commission. (2023). Staff accounting bulletin No. 121: Accounting for cryptocurrency transactions.
• U.S. Securities and Exchange Commission. (2025, January 23). Staff Accounting Bulletin No. 122.
• Deloitte. (2025). Heads up: SEC rescinds SAB 121 and issues SAB 122 on crypto regulations.
• Richmond Law Review. (2023). The evolving landscape of cryptocurrency regulation in the U.S. University of Richmond Law Review, 57(2), 355-381.
• Merkle Science. (2023). CFTC vs. SEC: Navigating regulatory overlap in the crypto market.
• Deloitte. (2022). Central bank digital currencies: Building block of the future of value transfer.

About the Author

Sergi Barberán holds a degree in Philosophy, Politics and Economics from the Universitat Pompeu Fabra. He works as a fixed-income manager at Caja Ingenieros and is an associate professor at UPF. He is also CFA-certified.