U.S. President Donald Trump has officially banned the creation and issuance of central bank digital currencies (CBDCs) through a new executive order titled “Strengthening American Leadership in Digital Financial Technology.”
Key Details:
- The order prohibits any federal agency from developing or promoting CBDCs, which are defined as “a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank.” (Read more: Wholesale CBDC vs Retail CBDC: A Comparative Guide)
- Prohibition Clause: “Any ongoing plans or initiatives at any agency related to the creation of a CBDC within the jurisdiction of the United States shall be immediately terminated,” the order states.
- A presidential working group will evaluate creating a strategic national digital asset reserve, potentially using bitcoin and cryptocurrencies seized by federal law enforcement. (Read more: Quick Take: Trump Forms Group to Explore US Crypto Reserve, Bans CBDCs)
Global Context:
Trump’s move comes at a time when central banks worldwide are exploring CBDCs to modernize payment systems.
- For example, the Bangko Sentral ng Pilipinas (BSP) recently concluded Project Agila, a wholesale CBDC pilot aimed at improving interbank fund transfers outside regular banking hours.
- The BSP’s test results highlighted the potential of distributed ledger technology to enhance payment efficiency and resilience.
- (Read more: BSP Completes CBDC Project Agila | Key Points
However, the BSP has not yet committed to full CBDC implementation, focusing on further studies before making a policy decision. (Read more: Finance Chief Diokno: This is Not the Right Time for CBDCs)
Broader Context:
- Trump pledged at the 2024 Bitcoin Conference to create a strategic bitcoin reserve. The U.S. government currently holds 198,109 BTC (worth $20.1 billion) from seized assets.
- U.S. Senator Cynthia Lummis proposed a bill to acquire 1 million BTC over five years, but it requires congressional approval.
Pro-Bitcoin Agenda:
Trump’s executive order aligns with his campaign promises, including the pardon of Silk Road founder Ross Ulbricht, protecting bitcoin from regulatory overreach, and rejecting centralized financial systems like CBDCs. (Read more: Quick Take: Trump Pardons Silk Road Founder Ross Ulbricht)
This article is published on BitPinas: Quick Take: Trump Bans CBDCs, Defines Them as “Central Bank Liability”
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