TLDR
- Circle CEO Jeremy Allaire expects Trump to issue executive orders making it easier for banks to hold crypto assets
- Allaire strongly supports repealing SAB 121, which restricts banks from holding crypto on balance sheets
- Circle donated $1 million in USDC to Trump’s inauguration committee
- Bitcoin hit $109,000 before Trump’s inauguration then corrected to $103,300
- Crypto ETPs attracted $2.2 billion in inflows the week before inauguration, with $1.9 billion going to Bitcoin ETPs
Circle CEO Jeremy Allaire believes President Donald Trump will soon take action to make it easier for banks to hold digital assets by repealing a controversial SEC accounting rule. Speaking at the World Economic Forum in Davos, Switzerland, Allaire expressed his support for removing SAB 121, a framework that currently prevents financial institutions from keeping cryptocurrency on their balance sheets.
@circle has contributed 1M USDC to President Trump’s Inaugural Committee. We are excited to be building
a great American company, and the fact that the Committee took payment in USDC is an indicator of how far we have come, and the potential and power of digital dollars.— Jeremy Allaire – jda.eth / jdallaire.sol (@jerallaire) January 9, 2025
The Securities and Exchange Commission’s Staff Accounting Bulletin 121 has been a point of contention in the crypto industry since its implementation. While the SEC framed the rule as a consumer protection measure, crypto executives view it as an unnecessary barrier to adoption. According to Allaire, the rule makes it financially punishing for banks and corporations to hold digital assets.
Congress previously attempted to overturn SAB 121, but their efforts were blocked by then-President Joe Biden’s veto. Biden defended his decision by stating his administration would not support measures that could put consumers and investors at risk. However, with Trump now in office, the crypto industry sees an opportunity for change.
Circle, which issues the USD Coin (USDC) stablecoin, has shown clear support for the Trump administration. The company donated $1 million worth of USDC to Trump’s inauguration committee on January 9th, demonstrating their commitment to building relationships with the new administration.
Despite high expectations from the crypto community, Trump did not mention digital assets or cryptocurrency regulations during his 40-minute inauguration speech on January 20th. Instead, he focused on immigration policy and his proposal for an “External Revenue Service” designed to collect tariffs from foreign sources.
The cryptocurrency markets have shown volatility around these political developments. Bitcoin reached a new all-time high above $109,000 just before Trump’s inauguration, though it later corrected downward by 2% to trade at $103,300.
Investor interest in crypto has grown substantially in the lead-up to Trump’s presidency. Crypto exchange-traded products attracted $2.2 billion in inflows during the week before the inauguration, with Bitcoin ETPs accounting for $1.9 billion of that total.
Year-to-date figures show Bitcoin funds have pulled in $2.7 billion in net inflows, according to data from CoinShares. This suggests growing institutional interest in cryptocurrency exposure through traditional investment vehicles.
The potential repeal of SAB 121 could have practical implications for the banking sector. Currently, financial institutions face regulatory hurdles and additional costs when attempting to hold digital assets on their books. An executive order removing these restrictions could make it more economically viable for banks to integrate cryptocurrency services.
Market observers are watching closely for any executive orders related to cryptocurrency regulation. While the timing remains uncertain, Allaire indicated he expects such actions to come “imminently” under the Trump administration.
The discussion around SAB 121 highlights the ongoing debate between regulation and innovation in the crypto space. Supporters of repealing the rule argue it would allow banks to more easily adopt blockchain technology and participate in the digital asset economy.
For stablecoin issuers like Circle, changes to banking regulations could affect their business model and market reach. USDC, Circle’s dollar-backed stablecoin, could potentially see wider adoption if banks face fewer restrictions on holding digital assets.
Financial institutions have shown increasing interest in cryptocurrency services, but regulatory uncertainty has often slowed their entry into the market. A clear regulatory framework that allows banks to hold digital assets could accelerate institutional adoption.
Critics of SAB 121 argue that the current rules don’t actually protect investors but instead create unnecessary barriers to technological advancement in the banking sector. They suggest that allowing banks to hold crypto assets could actually improve oversight and security for consumers.
