U.S. President Donald Trump has issued an order banning the issuance of a Central Bank Digital Currency (CBDC), marking a policy shift from the previous administration.
Policy Reversal and Support for Stablecoins
President Trump confirmed an executive order banning the issuance of CBDCs in the U.S. effective January 23, 2025. This move signifies a reversal of previous policies established under President Biden, focusing on promoting stable cryptocurrencies. The order highlights the importance of supporting blockchain technology across various sectors. Senator Mike Lee introduced the 'No CBDC Act' to make this ban permanent.
Market Implications
The removal of competition from CBDCs allows existing stablecoins like USDT and USDC to continue without the risk of competing with a national digital dollar. This decision strengthens the infrastructure of stablecoins, minimizing past regulatory uncertainties. Experts predict that the U.S. will maintain its influence in the crypto space by rejecting the adoption of CBDCs, while DeFi platforms built on Ethereum may benefit from increased market stability.
Potential Risks and Historical Context
While deregulation may foster innovation, there are concerns about the lack of oversight. This move reflects historical trends; past executive actions have often temporarily impacted digital asset markets. The reliance on stablecoins is expected to rise, potentially increasing both adoption and scrutiny in the regulatory landscape.
The ban on CBDCs and the support for stablecoins by President Trump marks a significant shift in U.S. policy regarding digital currencies and emphasizes the importance of stablecoins in the crypto market.
