Institutional cryptocurrency payments are likely to gain traction thanks to President Donald Trump's recent executive order. This order includes a ban on central bank digital currencies, or CBDCs.
On January 23, Trump signed this executive order, which prohibits the creation, issuance, circulation, or use of CBDCs in the United States. The order highlights concerns about potential threats to financial stability, individual privacy, and national sovereignty.
Industry leaders see this CBDC ban as a major turning point for institutional cryptocurrency adoption. Anndy Lian, an author and blockchain advisor, referred to the order as a “game-changer” for the U.S. crypto landscape. He believes the new crypto task force will help create a clearer regulatory environment.
“This isn’t just about setting rules; it’s about creating conditions for crypto to play a bigger, more legitimate role in the economy,” Lian said. He thinks this clarity could attract big investors who have been hesitant to enter the market.
The executive order might also boost the use of cryptocurrency payments among large financial institutions in the U.S. Economist Alex Krüger pointed out that institutions may start using blockchain technology for payments and tokenization.
While some praise CBDCs for their potential to increase financial inclusion, critics worry about their surveillance capabilities and government overreach. For example, in July 2023, Brazil’s central bank published the source code for its CBDC pilot. Within just four days, people noticed embedded surveillance mechanisms that allowed the central bank to freeze or limit user funds.
As of May 2024, around 140 countries were working on CBDC pilot projects. China’s digital yuan is one of the most advanced initiatives, according to Cointelegraph.
Trump’s ban on CBDCs shows support for the existing cryptocurrency market. Lian described the ban as a “curveball” for both the crypto and wider financial industries. He sees this as a “bet” on the crypto sector.
“This move shows where Trump stands: He’s betting on the existing crypto market rather than creating government-backed digital dollars. It’s a vote of confidence in Bitcoin, Ethereum, and others,” Lian explained.
Additionally, the executive order will exclude the U.S. Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) from cryptocurrency working groups. This could signal an end to previous efforts to debank the crypto industry. Caitlin Long, founder and CEO of Custodia Bank, commented on this in a post, saying, “Trump’s crypto executive order EXCLUDES the Fed & FDIC from the digital asset working group. Both tried to kill the industry through debanking and especially targeted my company, Custodia Bank. They belong on the outside. Nature is healing.”
During the Biden administration, several cryptocurrency firms faced banking access denials. Some insiders called this a coordinated effort known as “Operation Chokepoint 2.0.”