Summary The Trump administration has now delivered on 5 of its 8 pre-election promises. The remaining items will require new laws or regulations. The Strategic Bitcoin Reserve is good, but the SEC repealing SAB 121 will have a much larger impact on the industry. The playing field has been leveled for crypto, enabling banks to manage Bitcoin like other asset classes. Clear regulatory frameworks could spur innovative financial products, positioning the US at the forefront of the Bitcoin economy and reshaping global financial trends. It's truly challenging to stay up with the velocity of the Trump administration's changes regarding Bitcoin ( BTC-USD ) and the crypto industry in the US. In this January article , I listed 8 major crypto promises made by candidate Trump during his campaign and my ratings for the viability and impact of each. The article noted that two of the eight had been accomplished quickly after his inauguration. Now we can revise the list with 3 additional accomplishments. This article will provide an update on Trump's Bitcoin promises and show the Strategic Bitcoin Reserve is not the most important factor to focus on right now. There was a little noted, but immensely powerful SEC memo that will have a much greater, long-term impact on Bitcoin. The 8 Trump Promises - what's the status? 1. Fire Gary Gensler on "Day One" DONE Impact: HIGH Paul Atkins is nominated as the new SEC Chairman and is widely considered to be crypto-friendly. His confirmation probably happens late March or early April. 2. Advocate Pro-Crypto Policies via the SEC and "Bitcoin and Crypto Presidential Advisory Council" Viability: EASY Impact: HIGH It's still early days, and major SEC policy changes will be on hold until Atkins takes the chair at the SEC. However, the White House did host a Crypto Summit on March 7 which resulted in a number of actions highlighted below. 3. Ending "Operation Choke Point 2.0" DONE Impact: MEDIUM After the Crypto summit, the Office of the Comptroller of the Currency took action to reaffirm that a range of cryptocurrency activities are permissible in the federal banking system . I'm going to call this one complete. 4. Repeal SAB 121 DONE Impact: HIGH Status: see update below 5. Pardon for Ross Ulbricht DONE Impact: LOW Ross is out living his best life . Look for him on Rogan soon. 6. Support for Bitcoin Mining Viability: MEDIUM Impact: LOW No BTC mining executives attended the Crypto Summit, and nothing has been announced regarding energy cost relief or mining specific incentives. 7. Favorable Taxation for Bitcoin Viability: HARD Impact: HIGH Require Congressional modification of the tax code. Possible, but not probable. 8. Strategic Bitcoin Reserve DONE Impact: MEDIUM Trump created a Reserve of approximately 200,000 BTC already held by the government from asset seizures, with a "Never Sell" policy. The administration is open to additional budget neutral acquisitions but stopped short of committing to market purchases. Senator Cynthia Lummis from Wyoming has proposed a bill called the BITCOIN Act , which would "Implement a 1-million-unit Bitcoin purchase program over a set period of time." This would be the path to massively increase holdings, but is totally in the hands of Congress to enact. But don't hold your breath. Why is the repeal of SAB 121 important? From my Tracking Trump's Bitcoin Promises article, we read: Staff Accounting Bulletin 121 was released by the Security and Exchange Commission in April of 2022 under the Biden administration. This was a diabolical requirement for institutions desiring to hold crypto to record them as liabilities on their balance sheets. It significantly increased the capital requirements for TradFi institutions to the point it made crypto custody either prohibitively expensive or totally unfeasible. SAB 121 was intended to make banks treat crypto assets as if they were a toxic liability. It over burdened banks with capital liquidity requirements and also mired them in additional regulatory uncertainty and complexity. Bankers - who are already subject to intense oversight - were deterred by the notion of potential penalties for non-compliance of the confusing guidelines. The net effect was that the vast majority of institutions prudently avoided the crypto custodian space like the plague. Ironically, SAB 121 also potentially harmed consumers by pushing them into using less secure or transparent services, the opposite of the SEC's mandate: to protect investors. Repeal of SAB 121 with SAB 122 I had postulated that an Executive Order was required to nullify SAB 121, but the SEC did it with a one-page memo on January 23. SUMMARY: This staff accounting bulletin (“SAB”) rescinds the interpretive guidance included in Section FF of Topic 5 in the Staff Accounting Bulletin Series entitled Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users (“Topic 5.FF”). SAB 122 rescinds the guidance that required recognizing customer held crypto assets as liabilities and simply directs institutions to apply the existing FASB or IAS accounting standards. This levels the playing field for crypto. Why SAB 122 matters more than the Strategic Bitcoin Reserve SAB 122 marks a significant shift in the crypto rules of engagement for US financial institutions. Those painfully aware of the negative effect of SAB 121 absolutely cheered this change as a major step toward a more crypto-friendly environment for traditional finance. To be clear, I only see banks moving ahead with Bitcoin for the foreseeable future because it is by far the most trusted digital asset. The biggest barrier for banks to participate in the Bitcoin space was always the regulatory uncertainty and hostile environment generated by the SEC and US government. But now BTC can now be managed in the same way other asset classes -- stocks, bonds, precious metals -- have been for years. This simple change opens the floodgates for increased legitimacy and adoption, and will fire the starting gun for mainstream acceptance of BTC in investment portfolios. Look for banks to offer Bitcoin services through their existing infrastructure, making it simple for customers to buy, sell and hold BTC without needing an exchange. This could also make taxation and compliance -- currently a nightmare for retail exchange customers -- much easier, as traditional institutions already have tested mechanisms in place. If the Trump administration delivers on the promise of clear regulatory frameworks, we could also see a flurry of innovative products coming from traditional finance, such as payment solutions or Bitcoin backed loans. But some will ask, "Do we really want centralized banks to hold our Bitcoin?" The cypher punk ethos for many years has been, "not your keys, not your coins" and there are valid reasons for that. Exchanges and other centralized services have been prone to security issues, hacks, fraud, or operational errors. Scams and rug-pulls abound in this space. But on the other hand, stories about lost Bitcoin are epic: this man threw away a hard drive now worth $765 million in Bitcoin . I personally know a former colleague who was prescient enough to buy 1000 BTC at $1 a coin, but is at a complete loss to recover them now. Long-time crypto enthusiasts will continue to self-custody, but can we really expect grandma to buy and use a hardware wallet? No, she and most Boomers will take advantage of the secure, regulated, trusted institutional services for their Bitcoin, just like they do for their cash, stocks, and bonds. Conclusion The Trump administration has now delivered on 5 of 8 Bitcoin promises. The remaining 3 will require longer-term legislative or regulatory changes. The Strategic Bitcoin Reserve was a good measure by the US government, but not the most impactful. Consider the effect of 4,577 FDIC-insured US banks permitted to custody Bitcoin and offer services to their millions of customers. This is a potential groundswell of retail Bitcoin investment the likes of which we have never seen. The repeal of SAB 121 has thrown the gates wide open. As the US banking system advances with Bitcoin custody and products, it has the potential to move the US to the forefront of the Bitcoin economy, drive mainstream adoption, reshape financial trends, and set a global standard. Bitcoin continues to be a strong buy.
