Traditional Finance Embraces Crypto as Trump Promotes Regulation
Key Takeaways:
- Traditional finance and cryptocurrencies forge closer ties as President Trump advocates for favorable crypto regulation.
- Trump Media & Technology Group launches Truth.Fi, investing in crypto and other assets with Charles Schwab as custodian.
- Elimination of SAB 121 accounting guidance opens doors for banks to hold crypto assets for clients.
- Crypto industry anticipates increased integration with mainstream finance and wider acceptance.
- Despite regulatory uncertainty, President Trump's support signals a potential shift towards crypto adoption.
Convergence of Traditional and Crypto Finance
The lines between traditional finance and the emerging world of cryptocurrencies are blurring as President Donald Trump's administration embraces crypto regulation. The recent announcement by Trump Media & Technology Group (DJT) to expand into financial services through Truth.Fi exemplifies this trend. Truth.Fi will invest up to $250 million in cryptocurrencies and other assets, with custody services provided by financial giant Charles Schwab (SCHW).
Regulatory Developments
A significant regulatory update came with the SEC's elimination of Staff Accounting Bulletin 121 (SAB 121), which previously required financial institutions to hold crypto assets as liabilities. This change paves the way for banks to offer crypto custody services and reduces disclosure requirements for non-bank financial firms.
Industry experts see this regulatory shift as a catalyst for increased crypto adoption by banking giants, leading to wider acceptance of the industry. It is expected that crypto will become a more common investment asset alongside stocks, gold, and precious metals.
Waiting for Further Guidance
Banks eagerly await additional guidance from the Federal Reserve, FDIC, and OCC regarding crypto assets. The Trump administration has yet to appoint heads for the FDIC and OCC, and the Fed must appoint a new top banking regulator.
Fed Chair Jerome Powell has expressed support for innovation but emphasizes the importance of safety and soundness in crypto activities within banks.
Presidential Support
President Trump has taken an active role in promoting the growth of the crypto industry. He assembled a digital assets working group led by David Sacks to foster responsible adoption. The SEC has also established a "crypto task force" to enhance regulatory clarity and provide avenues for registration and enforcement.
Banks Consider Crypto Options
As regulatory hurdles ease, US banks are exploring various ways to engage with crypto. Options range from offering crypto products to providing stablecoin services, trading crypto for clients, and managing deposits on blockchain platforms.
Bank executives are actively considering the potential role of banks in crypto custody, acknowledging the growing demand from clients. The entry of major banks into the crypto space is expected to enhance the industry's legitimacy and accelerate its adoption.