The Trump family’s cryptocurrency venture, World Liberty Financial (WLFI), is in the spotlight due to its plans to launch a stablecoin, USD1, which has sparked concerns about the former president’s involvement in the digital asset industry.
WLFI’s crypto journey began with the release of a memecoin just before President Donald Trump’s inauguration, its price surged dramatically and then plummeted, leading to accusations of a pump-and-dump scheme. Moreover, WLFI made notable crypto purchases prior to key crypto-related events or announcements that the president was involved in, such as their $20 million investment in various tokens in the lead up to the White House Crypto Summit on March 7.
The expansion of WLFI’s portfolio coupled with dwindling regulation in the crypto sector has raised eyebrows among legal scholars and observers, who are worried about possible conflicts of interest within the Trump administration.
On March 25, WLFI disclosed its intention to launch USD1, a stablecoin “100% backed by short-term US government treasuries, US dollar deposits, and other cash equivalents,” according to co-founder Zach Witkoff. He also highlighted the coin’s potential for secure cross-border transactions, just days after WLFI raised over $500 million through the sale of its $WLFI tokens.
However, USD1’s connection to Trump has led to fears about potential security risks, market manipulation, and violations of the emoluments clause of the US Constitution. This clause is designed to protect against undue influence over American leaders.
Andrew Rossow, a cyber and digital media attorney, stated to Cointelegraph that the stablecoin is a direct challenge to constitutional protections meant to prevent conflicts of interest. He also warned about the potential for undue foreign influence over US policy through investment in or use of the stablecoin, considering Trump and his family hold 60% of World Liberty’s equity interests.
Furthermore, Corey Frayer, who served under former President Joe Biden on crypto policy at the SEC, expressed concern over the project’s focus on cross-border payments, which could be a way for foreign entities to curry favor with Trump.
Several US policymakers have also expressed concerns over potential foreign influence, market instability, and possible manipulation of global markets due to Trump’s crypto ventures. Trump’s potential role in crafting stablecoin legislation while simultaneously participating in a stablecoin project has been labeled as a constitutional violation that could undermine regulatory integrity.
Despite these concerns, some industry insiders welcome the president’s involvement as a sign of mainstream acceptance for the industry. However, the need for multi-faceted action to uphold principles of fair governance and maintain US credibility in the global financial system has never been more vital.
