Fresh on the heels of a massive memecoin launch, Trump issued an executive order this week targeting the digital asset industry.
It's unclear what the executive order's impacts will be, but it does identify a few themes, which we'll discuss in a minute.
The order mainly revokes executive guidance from the Biden administration. It also establishes a working group that will study current issues and report back with guidelines for new policies or actions. One of the things the working group is tasked with is evaluating the potential impacts of a digital asset strategic reserve.
The fact sheet that the Whitehouse published as a companion to the executive order clarifies the broad brush goals. The actions aim at fulfilling the campaign promise "to make the United States the 'crypto capital of the planet.'"
In other words, it's a broad mandate.
What's telling are the few areas of focus called out in the order and how they relate to the various topics we've been covering in this newsletter.
The executive order's first point addresses protections for participating in digital asset networks and specifically calls out that these protections should extend to the ability to self-custody.
"Protecting and promoting the ability of individual citizens and private-sector entities alike to access and use for lawful purposes open public blockchain networks without persecution, including the ability to develop and deploy software, to participate in mining and validating, to transact with other persons without unlawful censorship, and to maintain self-custody of digital assets."
Here's more context on why self-custody matters and how it contributes to Open Money's overall openness and decentralized aspects.
Is the ability to self-custody digital assets slipping away?
The most popular stablecoins by market cap hold their treasuries in US dollars and US Treasury debt. That means encouraging growth and access to digital stablecoins can help strengthen the dollar or at least give it another surface to help it stay relevant in a changing world.
Again, taking from the executive order:
"Promoting and protecting the sovereignty of the United States dollar, including through actions to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide."
Stablecoins might be boring compared to the rest of crypto, but they might also be the most innovative feature regarding digital dollars. Here's some more background:
By design, stablecoins are boring. They are designed to hold their value even as other digital assets fluctuate wildly. The mechanics of stablecoins are now attracting attention outside of the crypto space. They just might become an important tool for managing the United State's growing debt.
This point is interesting but needs more context to fit in with the rest of the order. It's not totally clear what this means, but it likely relates to how banks have put shadow bans on people and businesses with crypto transactions. The language in the order doesn't leave many clues:
"Protecting and promoting fair and open access to banking services for all law-abiding individual citizens and private-sector entities alike."
Beyond crypto transaction-specific banking issues, losing access to basic banking is an issue we've covered before:
There are a lot of reasons why the shift to open money makes sense. One of them is that the world is changing. Increasingly algorithms and AI will start to make decisions about our lives. In that kind of world, permissionless, open money will become an important tool.
In the executive order, the new administration also argues against the development of a central banked digital currency or a CBDC.
CBDCs have both costs and benefits. On the benefits side, CBDCs could act as an easy on-ramp to other digital asset systems.
On the cost side, there are a lot of concerns about privacy and financial surveillance that would be made possible by government-controlled digital money.
Here's a backgrounder on how governments around the globe are in the research and development phase when it comes to CBDCs:
After years of research, the Bank of Canada is putting a pin in plans to develop a central bank-backed digital currency.
The Open Money project hit a significant milestone this week. We made it through the first section of the outline — or at least what's in the outline right now.
The first group of posts are all about defining Open Money and establishing why a basic framework is worth figuring out.
I'm looking forward to the next section and to exploring some of Open Money's financial aspects before we return to the tech side of things in section three.
It's always great getting feedback, so thank you for all the questions, comments, and words of encouragement.
A summary of the key takeaways from section one of the Open Money project
Operating at internet scale makes Open Money both inevitable and resilient
The internet is still growing and getting better
The network effect is one of the ways that Open Money systems grow
What if cryptocurrencies were named open currencies instead?
