United States with cryptocurrency tokens, pictured in front of the White House to mark his inauguration, on display at the Coin Hero store in Hong Kong, China on Monday, January 20, 2025 Cartoon image of Donald Trump in the presidential election.
Paul Yong | Bloomberg | Getty Images
Days into President Donald Trump’s second administration, Wall Street is singing a different tune in code.
“For us, this equation is really whether or not we can act as a transactor, as a highly regulated financial institution.” morgan stanley CEO Ted Pick told CNBC on Thursday at the World Economic Forum in Davos, Switzerland.
The renewed optimism among a growing number of bank executives who were in Davos this week ties in with Trump’s pro-crypto agenda. Trump was a vocal skeptic in his first term, flipping on the issue during his 2024 campaign, and in his effort to topple former Vice President Kamala Harris, the crypto industry’s money. I’ve come to rely on it.
The president issued a sweeping executive order on Crypto on Thursday, focused on “protecting and promoting” the use and development of digital assets. Banks have been reluctant to support crypto and enable transactions up until this point, largely due to the government’s position. According to Cornerstone Research, the SEC has brought over 200 cryptocurrency-related enforcement actions since 2013.
“We will work with the Treasury Department and other regulators to figure out how to deliver that in a safe way,” Pick said.
Trump has appointed multiple crypto advocates to key positions throughout his administration. They include Paul Atkins, chairman of the Securities and Exchange Commission, where he served under President George W. Bush; Cantor Fitzgerald CEO Howard Lutnick was Trump’s choice for Commerce secretary, and hedge fund manager Scott Bessent was tapped to lead the Treasury Department.
If confirmed, Bessent will oversee the IRS and Financial Crimes Enforcement Network. It plays a key role in shaping tax and compliance policies for crypto trading and sets guidelines for crypto adoption in the United States.
Pick says Morgan Stanley will work with federal regulators to determine whether the bank can deepen its relationship with the cryptocurrency market. His firm was more aggressive than its Wall Street peers.
In 2021, Morgan Stanley became the first large bank to give wealthy clients access to Bitcoin funds. Last August, financial advisors were the first major Wall Street players to start selling clients on some of the Bitcoin exchange-sold funds launched early last year. So far, the wealth management business has only facilitated trades when customers request exposure to the new Spot Crypto fund.
Pick suggested that the more Bitcoin penetrates the mainstream, the more it will be considered a legitimate part of the financial system.
“The longer the deal goes on, the more perception becomes reality,” he said.
“Just another form of payment”
bank of america CEO Brian Moynihan reiterated his willingness to embrace crypto as a payment option, especially if the regulatory environment changes under the new administration. Speaking in Davos, Moynihan emphasized that clear guidelines can unlock broader adoption.
“When the rules come in and it becomes a real thing that you can actually do business, you know the banking system is going to be hard on the transaction side of that,” Moynihan said in an interview with CNBC on Tuesday. I did.
Moynihan, who runs the second largest bank in the US, noted that crypto could become “just another form of payment.” visa, master card or apple pay. However, he avoided discussing cryptocurrencies like Bitcoin as an investment or a store of value, calling it a “separate question.”
Another major hurdle to Wall Street’s adoption of cryptocurrencies is accounting rules issued by the SEC in 2022 that require banks to classify cryptocurrencies as liabilities on their balance sheets. This regulation subjects these assets to strict capital requirements, significantly raising the financial and regulatory risks of providing crypto protection services.
An effort to overturn the rule, known as SAB 121, gained bipartisan support in Congress last year. But then-President Joe Biden vetoed the proposed law, leaving the rules in place and further discouraging banks from adopting digital assets. Banks are largely prohibited from expanding their crypto offerings beyond trading in derivatives and offering ETFs to wealth management clients.
“Right now, from a regulatory perspective, we cannot own” Bitcoin, goldman sachs CEO David Solomon told CNBC in an interview at Davos this week. He said the bank would reconsider the issue if the rules changed.
Late Thursday, the SEC repealed SAB 121, potentially opening the door for banks to detain crypto assets without such onerous capital requirements.
“Goodbye, goodbye SAB 121! That wasn’t fun,” said SEC Commissioner Hester Peirce, tapped to lead a new “Crypto Task Force” late Thursday night after the decision was made on Tuesday.
Bitcoin hit a record of around $110,000 on Monday ahead of Trump’s inauguration, which will bring broader gains in the crypto market. As of midday Friday, it was trading at about $106,000.
-CNBC’s Hugh Sons contributed to this report.
