Fulfilling yet another election promise, US President Donald Trump, via executive order, has banned the Central Bank Digital Currency (CBDC) in the US. The order, signed on Thursday, revoked the Department of the Treasury Framework of July 7, 2022, and an order (Ensuring Responsible Development of Digital Assets) that was passed on March 9, 2022.

"Except to the extent required by law, agencies are hereby prohibited from undertaking any action to establish, issue, or promote CBDCs within the jurisdiction of the United States or abroad," Trump's order says.

It says that any ongoing plans related to the creation of a CBDC within the United States will be immediately terminated, and no further actions may be taken to develop or implement them.

"The Secretary of the Treasury is directed to immediately revoke the Department of the Treasury’s “Framework for International Engagement on Digital Assets,” issued on July 7, 2022," Trump says.

"All policies, directives, and guidance issued pursuant to Executive Order 14067 and the Department of the Treasury’s Framework for International Engagement on Digital Assets are hereby rescinded or shall be rescinded by the Secretary of the Treasury, as appropriate, to the extent they are inconsistent with the provisions of this order."

Working Group on Digital Asset

Trump has also established the President‘s Working Group on Digital Asset Markets. Within 180 days of the date of this order, the Working Group will submit a report to Trump, which will recommend regulatory and legislative proposals that advance the policies established in this order.

It will propose a regulatory framework governing the issuance and operation of "digital assets", including stablecoins, in the United States. It will also consider provisions for market structure, oversight, consumer protection, and risk management.

Trump before the elections had promised to set up a "Bitcoin Reserve" worth $20 billion. In the order, the working group has been tasked to "evaluate the potential creation and maintenance of a national digital asset stockpile and propose criteria for establishing such a stockpile, potentially derived from cryptocurrencies lawfully seized by the US government through its law enforcement efforts."

Besides, Trump’s executive order also explains "digital assets", which from now on refer to any digital representation of value that is recorded on a distributed ledger, including cryptocurrencies, digital tokens, and stablecoins.

“Central Bank Digital Currency” means a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank, the definition says. "The digital asset industry plays a crucial role in innovation and economic development in the United States, as well as our Nation’s international leadership. It is therefore the policy of my Administration to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy," says the order.

In a separate order, Trump has also fulfilled his earlier promise of pardoning Bitcoin pioneer and Silk Road founder Ross Ulbricht.

CBDC in India

In India, the Reserve Bank of India’s pilot project for exploring interoperability of CBDC is underway. The digital currency is in a trial mode, with the central bank currently running a pilot project. The retail digital rupee project, also known as e₹-R, was launched on December 1, 2022.

Initially, only four banks -- State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank -- in four cities were allowed to offer e₹-R. The scope of the pilot would be increased gradually to include more banks, users and locations. People get e₹-R from banks and can make transactions via their digital wallets. The digital rupee can be stored on mobile phones or devices.

With the latest decision by Trump, it remains to be seen how the Indian government will react to the development.

How crypto markets reacted

Markets were mixed yesterday as Trump signed the executive order to create a working group to evaluate the creation of a strategic national crypto reserve while BTC has been trading in a relatively broader range than usual between $101k and $107k. The world’s largest crypto, ETH, on the other hand, seems to have found support near 0.03 BTC per ETH; analysts expect an altcoin rally if this support holds. This shift would primarily mean that more money has now started to flow to ETH than BTC, the latest commentary by CoinSwitch Markets Desk says.

Avinash Shekhar, Co-Founder & CEO, Pi42, says altcoins, particularly Ethereum (ETH), Dogecoin (DOGE), and Cardano (ADA), have similarly struggled, with ETH hitting $2,930 on 13th Jan 2025 and now trading at $3,300, DOGE falling to $0.35, and ADA losing its $1 support level. "These altcoins have been especially vulnerable in the face of Bitcoin's price adjustments, further emphasizing the correlation between BTC's price fluctuations and the broader altcoin market."