A cartoon image of U.S. President-elect Donald Trump in front of the White House is displayed at a Queen Hero store in Hong Kong, China, Monday, Jan. 20, 2025.

Paul Yong | Bloomberg | Getty Images

Just days into President Donald Trump’s second administration, Wall Street is singing a different tune on crypto.

“For us, the equation is really around whether we, as a highly regulated financial institution, can act as a transactor,” Morgan Stanley CEO Ted Pick told CNBC on Thursday at the World Economic Forum in Davos, Switzerland.

New optimism among a growing number of bank executives at Davos this week is linked to Trump’s pro-crypto agenda. Trump, a vocal crypto-skeptic in his first term, flipped on the issue during his 2024 campaign and came to rely on money from the crypto industry in an effort to defeat former Vice President Kamala Harris.

On Thursday, the president issued a sweeping executive order on crypto, emphasizing “protecting and promoting” the use and development of digital assets. Banks are reluctant to support crypto and enable transactions at this point due to the government’s position. The SEC has taken more than 200 cryptocurrency-related enforcement actions since 2013. According to Cornerstone Research.

“We will work closely with the Treasury and other regulators to figure out how we can deliver this safely.”

Trump has named several crypto advocates to critical positions in his administration. They include Paul Atkins to head the Securities and Exchange Commission, where he was a commissioner under President George W. Bush. Cantor Fitzgerald CEO Howard Lutnick is Trump’s choice for secretary of commerce, and hedge fund manager Scott Besant was tapped to lead the Treasury.

If confirmed, Besant will oversee the IRS and the Financial Crimes Enforcement Network, both of which play a key role in shaping tax and compliance policies for crypto transactions and the adoption of crypto in the US. Set guidelines.

Chen says Morgan Stanley will work closely with federal regulators to determine whether deepening the bank’s ties to cryptocurrency markets is feasible. His firm has been more aggressive than its Wall Street peers.

In 2021, Morgan Stanley became the first major US bank to offer its wealthy clients access to bitcoin funds. Last August, it became the first major player on Wall Street to let its financial advisers start pitching clients on some bitcoin exchange-traded funds starting early last year. Until now, wealth management businesses have only facilitated trades when customers have requested exposure to new spot crypto funds.

Chen suggested that the more bitcoin enters the mainstream, the more it is seen as a legitimate part of the financial system.

“The longer it trades, perception becomes reality,” he said.

‘Just another form of payment’

Goldman Sachs has added more than $400 million to Bitcoin ETFs

Another major roadblock to Wall Street’s adoption of cryptocurrencies is an accounting rule, to be issued by the SEC in 2022, requiring banks to classify cryptocurrencies as liabilities on their balance sheets. It happens. This rule subjects these assets to strict capital requirements, which significantly increases the financial and regulatory risks of offering crypto custody services.

Efforts to repeal the rule, known as SAB 121, won bipartisan support in Congress last year. But President Joe Biden then vetoed the proposed legislation, leaving the ruling in place and further discouraging banks from adopting digital assets. Banks have largely been banned from expanding their crypto offerings beyond derivatives trading and offering ETFs to wealth management clients.

“At this point, from a regulatory standpoint, we can’t own” Bitcoin, Goldman Sachs CEO David Solomon told CNBC in an interview in Davos this week. He said that if the rules change, the bank will review the matter.

With the pro-crypto Trump administration now in power, there is renewed hope that SAB 121 could be repealed or revised, allowing banks to take custody of crypto assets without such burdensome capital requirements. may be allowed.

Bitcoin hit a record near $110,000 on Monday, ahead of broader gains in the crypto market ahead of Trump’s inauguration. As of late Thursday, it was trading at around $104,000.

b (b ( CNBC’s Hugh Sonne contributed to this report.

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