US President Donald Trump has officially banned the creation and issuance of Central Bank Digital Currencies (CBDCs) in the United States.
Throughout his campaign for the US Presidential Elections, Trump repeatedly vowed to oppose CBDCs if he won the election, and now, he has taken action on that promise.
An Executive Order, that outlines the ban, defines CBDC as “a type of digital money or monetary value, measured in the country’s official currency, that is a direct responsibility of the central bank.”
The order expresses concerns over the risks that CBDCs pose to privacy, national sovereignty, and the overall stability of the financial system. As an alternative, it advocates for a digital asset market led by the private sector, with a focus on stablecoins that are backed by the US dollar.
Under this new executive order, government agencies are prohibited from taking any steps to create or support CBDCs, both domestically and internationally. The order allows for CBDCs to be created only if required by law.
“Except as required by law, any ongoing initiatives or plans at any agency related to creating a CBDC within US jurisdiction must be immediately halted, and no further actions to develop or implement such plans may be undertaken,” the order reads.
What Does the Order Mean?
This move to block CBDC marks Trump’s first major decision on cryptocurrency during his second term as President.
A CBDC is a digital currency issued by a central bank, much like cryptocurrency, but with a fixed value determined by the central bank. Many countries have introduced CBDCs in recent years as part of efforts to transition toward digital currencies that are under centralized control.
Trump’s decision, however, signals his resistance to the idea of central banks controlling digital money, which contrasts with the decentralized nature of cryptocurrencies.
The order emphasizes opposition to central bank control and supports the expansion of legitimate, dollar-backed stablecoins as a viable private-sector alternative to CBDCs.
Stablecoins are another type of digital currency that keeps its value stable by being tied to an asset, usually a fiat currency like the US dollar or a commodity like gold. By encouraging the use of stablecoins, Trump aims to support the growth of digital currencies in the economy without government interference. This would also help maintain the dominance of the US dollar through stablecoins and other cryptocurrencies.
Furthermore, the executive order outlines the creation of a Presidential working group to develop a regulatory framework for digital assets. This group will focus on market structure, consumer protection, risk management, and plans to establish a national digital asset reserve.