I have to give him some credit. When it comes to campaign promises regarding crypto, President Donald Trump is following though.

First he issued a pardon for Ross Ulbricht, something that crypto community sought for years. This was followed up by an executtive order being signed which we will dig into.

As an aside, in a virtual speech to the WEF crowd at Davos, Trump stated he wanted to make the United States the leader in crypto and AI. As regular readers know, to me, these technologies are linked together.

Here is a summary of the order which we will go through.

Trump Crypto Executive Order: A New Dawn

We start with the establishment of regulation.

This one means little, especially after a recent Supreme Court ruling. The departments no longer have the ability to "write law". Congress is going to tackle this issue for anything substantial to emerge. However, directing agencies such as the SEC and CFTC to develop frameworks can feed into bills which Congress eventually votes upon.

The second one, promotion of Bitcoin is also odd. On that, I will simply say "okay".

It is the final two where the juice resides.

The Strategic Reserve Holding Digital Assets

One thing that stands out is the use of "digital assets" instead of Bitcoin. This means it could be more expansive over time.

Personally, I do not know the law or the process. Does this executive order really do anything regarding the strategic reserve? To me, that sounds like something that would require Congress. If that is the case, this set the focus but doesn't have teeth.

That doesn't mean it is without utility.

We are seeing a massive change in sentiment regarding the United States Government. The tonality of this EO means agencies are not going to be anti-crypto. It is also setting the table for a push in Congress to get approval on adding digital assets (Bitcoin) to the strategic reserve.

From a crypto perspective, this also opens up the door for others to follow. We see various proposals (bills) being proposed, not only in the United States but different countries. If many are convinced the United States is going down this path, it might incentivize others to join in.

No CBDC

Many fear the creation of a central bank digital currency (CBDC). Trump is obviously against it.

This is a convoluted situation so let's dig through it.

To start, the President has no authority over The Federal Reserve. He can issue all the EOs in the world, they mean nothing to Powell.

What this means is the Fed is free to establish a CBDC. Powell could create one tomorrow. There is a limitation. The Fed cannot arbitrarily create new legal tender. That is outside the scope of what it can do.

Basically, the Fed can create a token that is used for transactions between banks. This could be redeemable for a US dollar (banknote), which is legal tender. Bascially, it could be the Fed's own stablecoin.

But why would the Fed create that when it already has one. That is what Reserves are. When the Fed "prints", it is producing a bank instrument that goes on the balance sheets of banks. This is NOT legal tender.

Hence, the CBDC from the Fed will only be for the banking system.

CBDC As Legal Tender

If the Fed wanted to create a CBDC as legal tender, it would need approval from Congress. In other words, the law has to be changed.

The Federal Reserve Act puts forth what legal tender is. Banknotes are the only libaility on the Fed's balance sheet which meets this requirement. For something different, such as a CBDC, to fall under that category, a new law has to be passed.

This is what makes the EO interesting.

If a new law is required to create a CBDC that is legal tender, guess who signs it? Trump. If he is against it, then he can simply veto the bill.

Does this mean the EO has no merit? Not necessarily.

What this does prevent is the Treasury from trying to get into the game. There were many politicians, especially under Biden, who wanted to get Treasury to produce a "digital dollar". Obviously, the politicans did such a great job with fiscal policy, amassing tens of trillions in debt, they feel handling monetary policy is a good idea also.

This basically corners the Treasury (or people within it) from going down this path. It also clearly stated to the Fed that, even if it wanted to pursued, it will not become law.

The result is the next 4 years will not see a CBDC legalized in the United States (unless Trump changes his mind).

The Crypto Future

The crypto push is parallel to AI. We saw the announcement of Stargate earlier in the week.

Here is where the crypto future is bright.

We know the numbers associated with AI is enormouse. The denomination will get into the trillions. Of course, this means there is huge potential.

On this one, forget Bitcoin; it will be a minor actor. The real players will be the billions of agents that are performing tasks on a daily basis. All of this will be tied to infrastructure, much of it decentralized. Networks will become even more important, with AI agents flowing through them.

The result will be trillions in value generated. While it is possible (likely) that no single token matches Bitcoin, the totality will far surpass it. This could help to drive value to coins that are tied to networks with these agents. At present, Etheruem and the other EVM chains are leading candidates.

We see a massive shift in sentiment by the United States Government regarding crypto and AI. This will allow for greater innovation, outside the bounds of a few major corporations.

It certainly is a new dawn.