Digital Assets Find Common Ground as Trump Pushes for Regulation, Joins Financial Race
The traditional finance sector and the burgeoning realm of cryptocurrencies are converging as President Donald Trump advocates for more favorable regulation of digital assets while also investing in their growing popularity.
Trump Media & Technology Group's Crypto Expansion
In a recent development, Trump Media & Technology Group (DJT) unveiled plans to venture into financial services by establishing Truth.Fi. Amidst its expansion, DJT intends to allocate up to $250 million of Truth.Fi's capital into cryptocurrencies and other investments.
Charles Schwab (SCHW), one of America's leading financial giants, will take on the custodial responsibilities for these funds.
Regulatory Changes Under Trump's Administration
A significant administrative shift during Trump's first term paved the way for Wall Street giants to hold crypto assets on behalf of their clients. The Securities and Exchange Commission (SEC) eliminated Staff Accounting Bulletin 121 (SAB 121), which required financial institutions to account for crypto on their balance sheets as a liability.
This move eased the regulatory burden for banks, potentially opening the door for broader crypto custody services. It also led to the elimination of rigorous disclosure requirements for non-bank financial firms like Coinbase Global (COIN).
Increased Acceptance and Investment
Industry experts anticipate that these adjustments will foster a shift towards wider banking involvement in digital assets. Jeffrey Neuburger, head of the blockchain group at law firm Proskauer, predicts "a greater level of integration of crypto in mainstream financial channels."
Moreover, Neuburger suggests that "crypto is likely to become a more common investment asset like securities, gold, or other precious metals."
Regulatory Landscape and Federal Reserve's Stance
Banks await further guidance on crypto assets from the Federal Reserve (Fed), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC). While cautious about potential risks, Fed Chair Jerome Powell has expressed a willingness to support innovation and avoid actions that would hinder banks from serving legal crypto customers.
Trump's Pro-Crypto Stance
President Trump has been vocal in his support for the crypto industry's growth. The administration established a digital assets working group led by David Sacks. Additionally, the SEC has created a "crypto task force" to develop clear regulations and enforcements.
Trump's Personal Crypto Involvement
Trump has also ventured into the cryptocurrency space with the launch of official meme coins for himself (TRUMP) and former first lady Melania Trump (MELANIA) on the Solana blockchain.
Banking Industry's Evolving Perspective
US banks are exploring various crypto-related services, including offering crypto products and stablecoins, trading crypto for clients, and managing deposits on blockchain platforms. While not every bank is eager to hold crypto assets, Ian Katz of Capital Alpha Partners believes they prefer to rely on their own risk management systems rather than regulatory mandates.
Bank executives, such as Ted Pick of Morgan Stanley and Brian Moynihan of Bank of America, have indicated their willingness to provide crypto services if regulations permit. Phil Green of Cullen/Frost Bankers emphasizes the significance of client demand in shaping the industry's involvement in crypto custody.
With President Trump's advocacy and ongoing regulatory discussions, the convergence of traditional finance and digital assets is poised to continue, potentially leading to broader adoption and integration.