Trump Bans U.S. Central Bank Digital Currency Issuance

President Trump has ordered the ban of U.S. Central Bank Digital Currency (CBDC) issuance, effective January 23, 2025, signaling a policy shift from the Biden era.

Policy Reversal and Stablecoins

President Donald Trump issued an executive order banning U.S. CBDC issuance and affirming support for stablecoins. This action reverses previous policies established under President Biden. President Trump’s administration emphasizes promoting blockchain technology across sectors rather than CBDCs. Senator Mike Lee supports the ban by introducing the “No CBDC Act” to make it permanent. This order aims to protect against creating a national digital dollar.

Market Implications

Stablecoins like USDT and USDC will continue without facing competition from a U.S. digital dollar, affirming their market security. Existing stablecoin infrastructure enjoys bolstered protection, minimizing previous regulatory uncertainties. Experts foresee the U.S. remaining influential in the crypto space without embracing a national CBDC. DeFi platforms built on Ethereum could benefit, expecting increased confidence in market stability. Market participants remain cautious, awaiting further clarity on implementation specifics.

Potential Risks and Historical Context

While deregulation may encourage innovation, some argue risks concerning oversight persist. The move reflects historical trends; past executive decisions often impacted digital asset markets temporarily. Stablecoin reliance is set to rise, potentially increasing both adoption and scrutiny in the upcoming regulatory landscape.

Quote

“It is the policy of the Trump Administration to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy … promoting legitimate dollar-backed stablecoins worldwide and banning the issuing or promotion of any CBDC.” — Donald J. Trump, President of the United States source