President Donald Trump took a bold step on Thursday by signing an executive order that establishes a cryptocurrency working group, fulfilling a key campaign pledge made during his appeal to digital asset advocates and also banning controversial Central Bank Digital Currencies (CBDCs).
This newly established advisory body is set to take on a pivotal role in shaping US policy on digital assets. Its responsibilities include collaborating with Congress to draft cryptocurrency legislation and advising on the development of a proposed bitcoin reserve. Additionally, the council will work to align efforts across federal regulatory agencies, such as the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Treasury Department.
One of its more unique tasks will involve assessing the feasibility of creating and managing a national repository of digital assets. According to the executive order, these assets could potentially include cryptocurrencies confiscated during federal law enforcement operations.
On the same day, Trump issued another executive order banning the development and use of CBDCs within the United States.
The order explicitly forbids any attempt to “establish, issue, or promote CBDCs within the jurisdiction of the United States or abroad.” Trump justified the decision by warning of the risks posed by CBDCs, including threats to financial stability, personal privacy, and US sovereignty.
Often referred to as centrally-controlled “digital dollars,” CBDCs would be issued by the Federal Reserve and function as digital equivalents of physical currency, potentially granting the central bank expanded authority over monetary flows. Proponents argue that such a system could promote financial inclusion and provide tools for combating illicit activities.
CBDCs have raised significant concern among privacy advocates, who warn they could give governments unprecedented control over financial transactions. Unlike cash, which allows for anonymous and untraceable exchanges, CBDCs would operate on digital platforms managed by central banks. Every transaction could be monitored, recorded, and tied to individual identities, creating a potential for constant financial surveillance. This capability could erode personal privacy, enabling authorities to track spending habits, purchasing behaviors, and even location data in real-time. For individuals who value financial autonomy and confidentiality, the prospect of such pervasive oversight is deeply troubling.
Additionally, CBDCs could serve as tools for censorship and control. Governments or central banks could theoretically restrict or block transactions they deem undesirable, limiting financial freedom. For example, payments to politically sensitive causes, organizations, or individuals could be flagged or prohibited. In extreme scenarios, a CBDC system might even allow authorities to freeze assets or impose punitive financial measures against dissenters.