Trump Pushes Fed to Change Crypto Policies, Challenges Independence

President Donald Trump is challenging the Federal Reserve's independence by pushing for changes in its policies, with a focus on cryptocurrency-related initiatives. The Fed, which has had final say on key decisions related to the American banking system and U.S. monetary policy since the early 1950s, is now facing pressure from the Trump administration and its Republican allies in Congress.

The White House is planning to issue an executive order that will direct the Fed to change its policies on withholding master accounts from crypto banks. Master accounts allow banks to access the Fed’s financial services and are crucial for serving customers at scale. If approved, this would be a significant victory for the digital assets industry, as only a few crypto-focused banks, such as Kraken Financial and Custodia, would be eligible to receive master accounts.

Trump's executive order, signed last month, declared his right to dictate the Fed’s policies related to the “supervision and regulation of financial institutions.” This includes the Fed’s decision-making related to master accounts. While the Fed will continue to shape its own “monetary policy” on sensitive matters like interest rates, efforts are brewing in Washington to undo even the Fed’s monetary policy independence, with the crypto industry at the center of these plans.

Senator Cynthia Lummis introduced the Bitcoin Act, which would obligate the U.S. government to buy $80 billion worth of Bitcoin to bolster a federal Strategic Bitcoin Reserve. This would be funded by reissuing the Fed's Nixon-era gold certificates at market prices, which have appreciated significantly over the years. The Fed would receive these new, more valuable certificates but would then have to fork over $80 billion to the Treasury Secretary to fund Bitcoin purchases.

A Capitol Hill source with direct knowledge of the thinking behind the Bitcoin Act revealed that legislators and presidents have been hesitant to explicitly direct the Fed for decades. However, this position has now changed, with Republicans emboldened to take a stronger stance on overseeing the policies of ostensibly independent federal agencies due to perceived politicization.

Trump is not the first president to push against the Fed’s independence, but no president has successfully managed to rip key decision-making powers back from the Fed’s governors since the 1950s. If Trump and his congressional allies continue to press forward on this goal, with crypto policy as the tip of the spear, the digital assets industry could see both significant victories and contentious litigation.

One crypto lobbyist noted that the Trump administration appears to be using crypto-related policy as a “test case” for reclaiming control over independent agencies. While this could unlock crucial victories for the crypto industry, it could also associate the industry with a precedent-bucking agenda that is increasingly testing the limits of the U.S. Constitution. The outcome remains uncertain, but the crypto industry is prepared to take advantage of the situation.