FinReg Currents - Week 2

Each week of the first 100 days of the new Trump Administration, we will publish updates on key federal financial services regulatory and related developments.

This week, we review the following developments as of Wednesday:

• Senate Confirmation of Scott Bessent as Treasury Secretary
• Artificial Intelligence (AI) Executive Order
• Digital Financial Technology Executive Order
• Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 122
• White House Spending Freeze and Rescission

Senate Confirmation of Scott Bessent as Treasury Secretary

On January 27, 2025, the Senate confirmed Scott Bessent as Treasury Secretary with a 68‑29 bipartisan vote. President Trump announced Bessent’s nomination on November 22, 2024, and issued a formal appointment on January 20, 2025. Bessent spent most of his career in the private sector, with decades of experience in hedge funds and investments.

AI Executive Order

On January 23, 2025, President Trump issued an executive order entitled “Removing Barriers to American Leadership in Artificial Intelligence” (“AI Executive Order”), which builds on the day-one repeal of President Biden’s Executive Order 14110. The AI Executive Order calls for the development of an AI Action Plan within 180 days by a group including the Assistant to the President for Science and Technology (APST), the Special Advisor for AI and Crypto, and the Assistant to the President for National Security Affairs (APNSA), among others.

Additionally, the AI Executive Order calls on the APST, the Special Advisor for AI and Crypto, and the APNSA to review action taken in response to Executive Order 14110, and revise or revoke any action that does not “sustain and enhance America’s global AI dominance.” Finally, the AI Executive Order calls on the White House to reissue Office of Management and Budget (OMB) Memoranda M-24-10 and M-24-18, which governed the federal government’s acquisition and use of AI, to better align with the AI Executive Order.

Digital Financial Technology Executive Order

On January 23, 2025, President Trump issued an executive order entitled “Strengthening American Leadership in Digital Financial Technology” (“Digital Asset Executive Order”) to begin establishing a digital asset framework. The Digital Asset Executive Order rescinds President Biden’s Executive Order 14067, the Treasury Department’s Framework for International Engagement on Digital Assets (“Treasury Framework”), and any actions taken pursuant to either Executive Order 14067 or the Treasury Framework.

The Digital Asset Executive Order also establishes the Presidential Working Group on Digital Asset Markets (“Working Group”), which will be led by the White House AI & Crypto Czar and include the Treasury Secretary, the SEC Chairman, and the Commodity Futures Trading Commission Chairman. First, the Working Group is tasked with reviewing regulations and guidance that affect digital assets and submitting recommendations to the Chair on whether the items should be rescinded or modified within 60 days. Then, within 180 days, the Working Group will submit a report to President Trump recommending a federal digital asset regulatory framework and evaluating a potential national digital asset stockpile.

Additionally, the Digital Asset Executive Order prohibits the issuance of a Central Bank Digital Currency (CBDC) and terminates any ongoing agency actions related to the creation of a CBDC within the U.S.

SEC Rescission of Cryptocurrency Accounting Guidance

On January 23, 2025, the SEC issued Staff Accounting Bulletin No. 122 (Bulletin No. 122), which rescinds Staff Accounting Bulletin No. 121 entitled “Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users.” Along with rescinding the previous guidance, Bulletin No. 122 advises entities with an obligation to safeguard crypto assets for others to “determine whether to recognize a liability related to the risk of loss under such an obligation.”

White House Spending Freeze and Rescission

On January 27, 2025, the OMB ordered a temporary freeze, pending review, of all federal grant, loan, and other financial assistance programs. The OMB ordered all federal agencies to temporarily suspend payments, while exempting certain categories such as Social Security and Medicare payments.

On January 29, 2025, the OMB rescinded the directive but said it will continue its review of federal government spending. This development followed a temporary stay by a federal judge, following a complaint by an advocacy group.

For more details on any of these developments, or to discuss how these changes may impact your business, please reach out to our team. Stay tuned for next week’s update, where we will continue to bring you the latest in federal financial services regulatory and related developments.

Our previous issue can be accessed at this link FinReg Currents - Week 1 | Morrison Foerster