Wall Street CEOs Warm Up to Cryptos as Trump Plans Promise Better Regulation

Wall Street CEOs are beginning to adopt a more optimistic view about cryptocurrencies four days into the Trump administration. According to CNBC, the optimism among bank executives who attended the World Economic Forum in Davos, Switzerland is closely linked to President Trump’s crypto plans.

“For us, the equation is really about whether we, as a highly regulated financial institution, can act as transactors,” Morgan Stanley CEO Ted Pick said.

Changing Stand

During his first terms as US president, Trump was very vocal about his crypto skepticism. He however changed his stand on the digital assets during the 2024 campaigns and even relied on financing from the crypto industry to win the elections.

On January 23, Trump signed an executive order on cryptocurrencies. In the sweeping order, the President underscored the need to protect and even promote the development and use of digital assets. Banks have been reluctant to embrace cryptocurrencies and enable transactions due to the government’s stand. Since 2013, the Securities and Exchange Commission (SEC) has taken over 200 crypto-related enforcement actions.

“We’ll be working with the Treasury and the other regulators to figure out how we can offer that in a safe way,” Pick added.

Pick stated that Morgan Stanley will work with regulators to understand the possibility of deepening its ties with the crypto market. Morgan Stanley was the first big bank to give rich clients access to bitcoin funds in 2021. Last year, Morgan Stanley became the first leading Wall Street bank to allow financial advisors to pitch customers on bitcoin exchange-traded funds. In the crypto industry, the bank is more aggressive than its peers.

Need for Clear Rules

Speaking in Davos, Bank of America CEO Brian Moynihan expressed willingness to leverage crypto as a payment option if the Trump administration improves the regulatory environment. He noted that cryptocurrencies have the potential of becoming another form of payment like Apple Pay, Mastercard or Visa. But the key to unlocking widespread crypto adoption lies in developing clear rules and regulations.

“If the rules come in and make it a real thing that you can actually do business with, you’ll find that the banking system will come in hard on the transactional side of it,” Moynihan said.

The new administration appears to have set in motion Trump’s digital assets strategy to address the crypto regulation gap. On January 23, Trump issued a directive to set up a cryptocurrency group. This working group will propose new regulations for the industry and explore the establishment of a national crypto stockpile.

In doing so, Trump fulfilled the promise of reviewing the US crypto policy. Additionally, the President ordered the protection of banking services for digital asset companies. Through the order, the President placed a ban on development of central bank cryptocurrencies in the US. Such currencies would compete with existing cryptos.

SEC’s Accounting Rule

The other issue that has been keeping Wall Street CEOs from adopting cryptos is an accounting rule issued in 2022 by the SEC. This rule requires financial institutions to classify cryptos as liabilities on their financial statements. In doing so, it subjects digital assets to stringent capital requirements that raise regulatory and financial risks of the banks significantly.

Last year, efforts to change this rule garnered bipartisan support from Congress. However, the Biden administration vetoed the proposed law, which left the rule intact. This discouraged banks from embracing cryptocurrencies. For some time now, banks have been forbidden from increasing crypto offerings beyond derivatives trading. They’ve also been discouraged from offering wealth management customers ETFs.

“At the moment, from a regulatory perspective, we can’t own bitcoin”, Goldman Sachs CEO David Solomon said.

Trump’s pro-crypto administration has brought renewed optimism that the SEC rule may be revised or repealed to give banks custody over crypto assets without heavy capital requirements. Several crypto advocates have already been nominated to important positions to steer Trump’s blockchain initiatives. These include Paul Atkins as SEC chairperson and Howard Lutnick as the Commerce Secretary.