Why Is the Market Lackluster Despite Donald Trump’s Cryptocurrency Decisions Yesterday? Analysis Company Digged Deeper: “The Decisions Are Positive, But…”

According to investment bank TD Cowen, the Trump administration crypto para has taken its first steps to engage with its industry, but significant regulatory clarity remains a long way off.

TD Cowen: “Trump’s Cryptocurrency Steps Are Symbolic, Years Away for Tangible Contribution”

Former President Donald Trump signed an executive order yesterday creating the Digital Asset Markets Working Group. The group’s goal is to identify and remove barriers to cryptocurrency innovation, marking a symbolic step forward for crypto in the United States.

“That’s a no-brainer,” TD Cowen Washington Research Group, led by Jaret Seiberg, said in a report Friday. “Every President establishes committees and task forces on important issues. “It is symbolically important as it reflects how Team Trump prioritizes crypto, but it is not the same as rule changes.”

Establishing the necessary regulatory framework for the crypto industry will take “years, not weeks,” Seiberg noted, as these processes often involve rulemaking, public input and potential legal challenges.

The working group’s responsibilities include assessing the feasibility of a national digital asset stockpile, but Trump refrained from creating a Bitcoin reserve, contrary to some expectations.

“Since Trump’s priority is the US dollar, we remain skeptical that it could be at risk as a reserve currency if countries turn to Bitcoin,” Seiberg said.

Seiberg also noted that Trump’s support for a Bitcoin reserve would contradict his long-held belief in the superiority of the US dollar as the global reserve currency. “Arguing that a Bitcoin reserve would be a hedge to preserve the US role in the global economy is unlikely to sway Trump,” he added.

In parallel with Trump’s executive order, the U.S. Securities and Exchange Commission (SEC) repealed Staff Accounting Bulletin No. 121 (SAB 121), which had previously required banks that held cryptocurrencies for their customers to classify those assets as their own liabilities.

This repeal allows banks to serve as crypto custodians without taking on the risk of classifying these assets as liabilities, and was an expected move as it does not require a formal rulemaking process.

In addition, the SEC recently launched a new crypto task force led by Commissioner Hester Peirce. The task force aims to develop a comprehensive framework for the sector, but Seiberg warned that meaningful action will take time.

“These rules can be challenged in court,” Seiberg explained. “The sooner the SEC proposes these changes, the more time there will be for this process to be completed before the next presidential election.”

*This is not investment advice.