In a bold move, U.S. President Donald Trump has issued an executive order banning the creation and issuance of Central Bank Digital Currency (CBDC) in the United States. This decision reflects Trump's long-standing stance, which he highlighted during his presidential campaign, where he opposed the idea of a CBDC once in office.

The order defines CBDC as a form of digital money directly issued by the central bank, backed by the national currency. However, Trump raised concerns over privacy risks, sovereignty, and financial stability tied to CBDCs. Instead, the executive order advocates for a digital asset ecosystem driven by the private sector, with a focus on dollar-backed stablecoins as a safer alternative.

From now on, agencies are prohibited from taking any actions to issue or promote CBDCs, both within the U.S. and globally. The order also mandates the immediate termination of any ongoing CBDC development initiatives unless legally required.

This is Trump's first significant move on cryptocurrencies in his second term. A CBDC is essentially a digital currency issued by a central bank, unlike decentralized cryptocurrencies, with its value controlled by the bank. While many countries have begun exploring CBDCs, Trump's order signals his resistance to centralizing financial control, preferring decentralized digital currencies instead.

In line with his vision, the executive order encourages the growth of stablecoins, cryptocurrencies pegged to assets like the U.S. dollar; ensuring private-sector alternatives to CBDCs. This push for stablecoins ensures the U.S. dollar's dominance in the digital space while minimizing government interference.

The order also establishes a Presidential working group tasked with creating a federal regulatory framework for digital assets, focusing on market structure, consumer protection, and risk management. This group will work towards building a national stockpile of digital assets, further shaping the future of the digital economy in the U.S.