The Executive Order titled "Strengthening American Leadership in Digital Financial Technology," signed by President Trump in January 2025, provides crucial context about the composition and focus of the President's Working Group on Digital Asset Markets (PWG) and sheds light on the Federal Reserve's (Fed) notable absence from it.
Reason for Federal Reserve's Absence
The Executive Order establishes the PWG to develop a federal regulatory framework for digital assets, including stablecoins and a potential national digital asset stockpile. The PWG includes heads of key government agencies such as the Treasury, SEC, CFTC, Commerce, Homeland Security, Justice, and others critical to digital asset innovation and market oversight. However, the Fed is not included in the official membership.
The reason for this exclusion is rooted in the administration's policy stance articulated in the Executive Order, which emphasizes promoting private-sector innovation in digital assets, protecting economic liberty, and explicitly prohibiting the establishment, issuance, circulation, and use of Central Bank Digital Currencies (CBDCs) in the U.S. The order directs agencies to take measures to protect Americans from CBDCs, which are seen as threats to financial stability, privacy, and U.S. dollar sovereignty. This framework limits the Fed's role since CBDC initiatives fall under its purview, and the administration's stance is to prohibit such developments.
Thus, the Fed is deliberately sidelined from PWG activities to prevent central bank-led digital currency projects from overshadowing private innovation and market-driven stablecoins.
Federal Reserve's Position
The Fed has maintained a cautious, low-profile approach to crypto regulation. Historically, it investigates CBDC feasibility and oversees financial stability but has refrained from assertive regulation of crypto markets. The Fed has neither publicly opposed nor criticized the PWG's formation or its exclusion. However, the Fed has also distanced itself from assertive crypto regulation by withdrawing from certain joint regulatory statements, signaling a more restrained role consistent with the administration's policy.
Public and Industry Opinion
Public opinion on the Fed's absence from the PWG is mixed. Proponents of the
administration’s approach argue that excluding the Fed promotes innovation by reducing bureaucratic hurdles and preventing central bank overreach. They applaud the emphasis on private-sector stablecoins and lighter-touch regulation that supports entrepreneurial growth and U.S. leadership in blockchain technology.
Conversely, critics worry that sidelining the Fed may undermine systemic financial
oversight and stability. They emphasize the Fed's central role in monetary policy and argue that its absence from crypto policymaking risks regulatory fragmentation and unchecked risks in digital asset markets. Some fear that excluding the Fed leaves oversight gaps that could jeopardize market integrity and consumer protection.