In a notable change of sentiment, Wall Street executives are expressing a newfound optimism toward the crypto industry just days into President Donald Trump’s second administration . This shift is largely attributed to the 47th President’s pro-crypto agenda, which marks a stark contrast to his previous skepticism during his first term. Morgan Stanley CEO Advocates For Increased Crypto Transactions At the World Economic Forum in Davos, Switzerland, Morgan Stanley CEO Ted Pick highlighted the bank’s interest in becoming more involved in cryptocurrency transactions. He stated , “For us, the equation is really around whether we, as a highly regulated financial institution, can act as transactors.” Historically, banks have been cautious about engaging with crypto, largely due to regulatory uncertainties. The Securities and Exchange Commission (SEC) has enforced over 200 actions related to crypto since 2013, creating a trepidation that has stymied institutional adoption. However, with President Donald Trump’s new administration signaling a more favorable regulatory climate for digital assets, many executives are reevaluating their positions. Trump has appointed several advocates for cryptocurrency to key roles within his administration. Notable nominees include Paul Atkins for SEC chair, Howard Lutnick for Secretary of Commerce, and hedge fund manager Scott Bessent for Treasury. If confirmed, Bessent would oversee crucial departments that influence tax and compliance policies for digital asset transactions, potentially paving the way for broader acceptance of digital assets. Morgan Stanley has already taken steps to engage with cryptocurrencies, becoming the first major US bank to offer its wealthy clients access to Bitcoin funds in 2021. The firm has also allowed its financial advisors to promote recently launched Bitcoin exchange-traded funds (ETFs). Pick noted that as Bitcoin becomes more entrenched in mainstream finance, its legitimacy as a financial asset will grow. “The longer it trades, perception becomes reality,” he commented. SEC Rescinds SAB 121, Easing Regulatory Burdens For Banks Despite the optimism, major roadblocks remain. A significant accounting rule established by the SEC in 2022 requires banks to classify cryptocurrencies as liabilities on their balance sheets, imposing strict capital requirements that deter banks from offering crypto custody services. Efforts to overturn this rule, known as SAB 121, received bipartisan support in Congress but were ultimately vetoed by then-President Joe Biden, leaving the regulatory landscape challenging for banks. Goldman Sachs CEO David Solomon acknowledged these hurdles, stating, “At the moment, from a regulatory perspective, we can’t own Bitcoin.” However, he expressed a willingness to revisit the issue if the regulatory framework evolves. In a significant development, the SEC recently rescinded SAB 121, which could alleviate some of the burdens on banks looking to engage with digital assets. SEC Commissioner Hester Peirce, who has been appointed to lead a newly formed “crypto task force,” welcomed the decision, indicating a shift toward a more accommodating regulatory environment for cryptocurrencies. Featured image from DALL-E, chart from TradingView.com
