What Banking Organizations Need to Know About the Trump Executive Orders

Since taking office on January 20, 2025, President Donald J. Trump has signed a staggering number of Executive Orders ¹ and Memoranda,² and more continue to be issued each day. These executive actions signal President Trump’s aggressive agenda to significantly redefine federal policy in a range of areas. This Advisory addresses the executive actions issued so far that are most likely to affect banking organizations, including those concerning digital assets, a regulatory freeze, and diversity, equity, and inclusion (DEI) initiatives.

The executive actions issued to date do not cover a number of the specific regulatory issue areas that banking organizations have been expecting from the Trump administration, such as an increased appetite toward mergers and acquisitions or bank charters. Nonetheless, there is much that banking organizations need to pay attention to already, from strategic, compliance, operational, or personnel perspectives.

The following are some of the key executive actions issued in the first 10 days of the administration that may affect banking organizations, and our preliminary view of their implications. Our Financial Services team is prepared to advise you on these and any executive actions to come.

Rescinding Restrictions on and Signaling Openness to Digital Assets and Cryptocurrency

Summary of Strengthening American Leadership in Digital Financial Technology (Executive Order, January 23, 2025). This Executive Order states that the policy of the administration will be to support the responsible growth of digital assets, blockchain technology, and related technologies across the U.S. economy. Among other steps, it establishes a new President’s Working Group on Digital Assets, chaired by a new Special Advisor for AI and Crypto and including representation across government (although notably not including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (FDIC), or the Federal Reserve (together, the Banking Agencies)), tasked with taking steps to promote regulatory clarity for this asset class. Within 30 days of the date of the Executive Order, relevant agencies are tasked with identifying all regulations, guidance documents, orders, or other items that affect the digital asset sector and then, within 60 days, relevant agencies must submit recommendations regarding whether these items should be rescinded or modified. Within 180 days of the Executive Order, the working group must submit regulatory and legislative proposals advancing policies established in the Executive Order, including a new federal regulatory framework governing the issuance and operation of digital assets. It further directs the agencies to evaluate the creation of a digital asset stockpile and includes a sweeping prohibition on any U.S. agency engaging in any action to establish, issue, or promote central bank digital currencies (also known as CBDCs). At the same time, it states a policy of promoting the development of dollar-denominated stablecoins worldwide and requires that the working group include stablecoins within the regulatory framework that it is to develop. In its purpose statement, it includes language supporting “fair and open access to banking services for all law-abiding” citizens and private-sector entities but does not direct specific action to this objective.

Implications for Banking Organizations

This Executive Order could have far-reaching implications for banking organizations, since it portends the rapid development of new regulatory standards for digital assets, including stablecoins, and presumably the much more widespread development of digital asset markets. The Biden administration had a notably skeptical attitude toward this asset class, particularly after the failure of FTX, characterized by significant enforcement activity and significant formal and de facto barriers toward banking organizations engaging in cryptocurrency-related activities. Banking organizations will need to be ready for the opportunities and risks that digital assets present, as federal banking regulators are likely to take a more permissive attitude toward the involvement of banking organizations in cryptocurrency-related activities. A good place to start is an evaluation of the technology and compliance costs related to stablecoin activities. Stablecoin legislation is likely to follow the recommendations of the working group, and banking organizations may consider whether they wish to begin engaging in stablecoin-related activities. Moreover, although there are challenges to implementation, the Banking Agencies may expect banking organizations to show that they are not engaged in derisking customers associated with digital assets (so-called “debanking”), in line with the Executive Order, and should review their activities for practices that may raise issues in this respect.³

Implementation of a Regulatory Freeze

Summary of Regulatory Freeze Pending Review (Memorandum, January 20, 2025). The new administration has ordered agencies (1) to refrain from proposing or issuing any rules until a “department or agency head appointed or designated by the President after noon on January 20, 2025,” or their delegee, has reviewed and approved the rule (subject to limited exceptions), (2) to withdraw any rules that have been sent to the Federal Register but not yet published so that they can be reviewed and approved by the appropriate Trump-appointed official, and (3) to consider postponing for 60 days the effective date of any rules that have been published in the Federal Register or that otherwise have been issued but have not yet taken effect.

Implications for Banking Organizations

The Banking Agencies will not be issuing any rules, or guidance or policy statements that have the effect of a rule until they have new leadership. As of this writing, only the FDIC, among the Banking Agencies and CFPB, has a temporary or acting head designated by the president after inauguration day of this year. Additionally, all proposed banking regulations from the Biden administration that have not yet gone into effect are now in limbo and there is the possibility that rules that have been finalized but have not yet taken effect will be paused. Some recent rules are likely to be affected by the regulatory freeze, including the CFPB’s final rule on overdraft lending for very large financial institutions (which is slated to go into effect on October 1, 2025), Financial Crimes Enforcement Network’s final rule implementing beneficial ownership information reporting requirements (which was slated to go into effect on January 1, 2025, but has been postponed due to ongoing litigation), the final rule amending regulations implementing the Community Reinvestment Act (provisions of which were scheduled to come into effect in stages over the next several years), proposed revisions to U.S. capital rules (also known as Basel III “Endgame”), and the FDIC’s proposed rule revising brokered deposit regulations.

Rescission of DEI Programs

Summary of Ending Radical and Wasteful Government DEI Programs and Preferencing (Executive Order, January 20, 2025). The new administration has deemed government programs and initiatives related to DEI to be wasteful and discriminatory. There is now an increased focus on eliminating these programs, including equity action plans, DEI performance reviews, and environmental justice initiatives, within the federal government. The Office of Management and Budget (OMB), the Office of Personnel Management (OPM), and other federal entities are directed to assess and remove DEI positions, grants, and policies.

Summary of Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Executive Order, January 21, 2025). The new administration aims to end what it has described as discriminatory and “illegal” DEI practices in federal agencies and the private sector, including financial institutions. The Executive Order revoked several prior Executive Orders and policies promoting DEI while also mandating compliance with federal civil rights laws. Federal agencies are directed to eliminate DEI references from federal processes and promote merit-based practices in the private sector. The head of “each agency” is directed to include in every contract or grant award a term in which the contractual counterparty or grant recipient certifies that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws. In addition, the heads of all agencies are directed to take “all appropriate action … to advance in the private sector the policy of individual initiative, excellence, and hard work.” The Attorney General, in consultation with “the heads of relevant agencies,” is directed to prepare a report containing recommendations “to encourage the private sector to end illegal discrimination and preferences, including DEI.” The Attorney General’s report shall propose a strategic enforcement plan that includes “each agency” identifying up to nine potential private sector entities for civil compliance investigations.

Implications for Banking Organizations

Banking organizations that implemented DEI programs as part of their hiring, retention, and employee relations practices may be subject to increased scrutiny and potential enforcement by federal agencies seeking to crack down on what they consider to be discriminatory and illegal DEI practices. Banking organizations with these programs often advertise them on their websites and disclose them in their annual reports on Form 10-K and Corporate and Social Responsibility Reports, and similar materials. These Executive Orders could also be applied beyond employment practices to broader banking activities that may be directed towards low- and moderate-income communities and minority communities. Legal exposure could come from regulatory action or private litigation. Banking organizations should review their policies and practices, as well as their public disclosures, to understand their potential legal exposure in light of these executive actions. Although there is significant doubt about this interpretation, the Office of Federal Contract Compliance Programs has taken the view in the context of past Executive Actions that a bank may be classified as a government contractor because it obtains federal deposit insurance, acts as an issuing and paying agent for U.S. savings bonds and notes, or is a federal fund depository.

Federal Workforce Measures

Summary of Hiring Freeze (Memorandum, January 20, 2025). A hiring freeze is now in effect throughout the federal government, including all executive departments and agencies. While it is not clear if this applies to all banking agencies (e.g., Federal Reserve Bank employees), it is likely that all will comply. Vacant civilian positions cannot be filled, and no new positions can be created unless exempted. The Memorandum directs OMB to submit a plan to reduce the federal workforce in 90 days.

Summary of Restoring Accountability To Policy-Influencing Positions Within the Federal Workforce (Executive Order, January 20, 2025). This Executive Order reinstates a prior Schedule F policy which the Trump administration had implemented in 2020, which would make it easier to dismiss certain federal employees, such as, if they do not “faithfully implement” administration policies.

Summary of Return To In-Person Work (Memorandum, January 20, 2025). This Memorandum requires heads of federal agencies to terminate remote work arrangements and requires employees to work in-person full-time (subject to limited exemptions).

Summary of Deferred Resignation Email to Federal Employees (Email From Office of Personnel Management, January 28, 2025). On January 28, 2025, OPM sent a mass email to a large number of federal employees offering the option of submitting a “deferred resignation” which would exempt them from in-office work requirements and entitle them to pay and benefits “regardless of daily workload” until September 30, 2025, at which time their resignation would become effective.

Implications for Banking Organizations

These executive actions might augur significant changes in the composition of the workforce at the Banking Agencies, with unpredictable effects. A stoppage in hiring by the Banking Agencies may slow the pace of examinations and enforcement, but also may slow Banking Agency responses to requests and applications by banking organizations. The executive actions may mean that there is more turnover among the career staff at the Banking Agencies than is common during transitions. Banking Agencies may become more responsive to this administration’s deregulatory imperatives and industry requests; however, they may lose skilled talent through turnover and attrition.

Designating Certain Entities as Foreign Terrorist Organizations

Summary of Designation of Ansar Allah as a Foreign Terrorist Organization (Executive Order, January 22, 2025). The Executive Order sets in motion a process by which Ansar Allah, also known as the Houthis (a political and military group operating primarily in Yemen), shall be considered for designation as a foreign terrorist organization.

Summary of Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists (Executive Order, January 20, 2025). The Executive Order sets in motion a process by which certain international cartels and other transnational criminal organizations, particularly organizations active in Mexico and Central America, will be designated as foreign terrorist organizations or specially designated global terrorists.

Implications for Banking Organizations

The Executive Orders designating new entities as foreign terrorist organizations will necessitate additional anti-money laundering, anti-terrorist financing, and sanctions obligations for banks and other financial institutions. Banking organizations with lending and other activities involving Mexico and Central America may be particularly affected.

Executive Actions That Affect Possible Borrowers

Summary of Office of Management and Budget, M-25-13 [Pause of Federal Financial Assistance] (January 27, 2025). OMB directed a temporary pause of agency grant, loan, and other financial assistance programs, which OMB later clarified would only apply to programs “implicated by” President Trump’s recent Executive Orders. The OMB directive mandating this pause was then rescinded with unclear effects, and the pause was separately stayed by a judge in the U.S. District Court for the District of Columbia.

Summary of Removing Barriers to American Leadership in Artificial Intelligence (Executive Order, January 23, 2025). This Executive Order declares the Trump administration’s policy of “dominating” global artificial intelligence (AI) “in order to promote human flourishing, economic competitiveness, and national security,” and instructs the heads of certain executive agencies to develop an action plan to implement this policy, as well as revise or revoke any actions their agency took under the Biden administration that are inconsistent with this policy.

Implications for Banking Organizations

Banking organizations may need to consider how their borrowers and other customers may be affected by the executive actions. For some customers, such as entities involved with AI and digital assets, the effect may be favorable. For others, such as entities with federal contracts or those involved in renewable energy, the effects may be less favorable.

Conclusion

The executive actions are being issued at a rapid pace, and we will endeavor to update this Advisory as material developments happen. If you would like more information about how the recent executive actions may impact your business, please contact any of the authors of this Advisory or your usual Arnold & Porter contact. The firm’s Financial Services team would be pleased to assist with any questions that you have, and can make available one of our many Arnold & Porter experts in relevant areas such as employment law, sanctions, governance, public policy, or federal contracting as needed.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.