Trump-Linked Company to Launch Stablecoin
World Liberty Financial, a cryptocurrency venture associated with Donald J. Trump and his sons, revealed on Tuesday its intention to introduce a stablecoin named USD1. This move further solidifies the former president’s financial involvement in the cryptocurrency sector, coinciding with his administration’s easing of regulatory measures on the industry. While the exact launch date of the stablecoin remains undisclosed, the company emphasized its aim to provide a stable digital currency pegged to the U.S. dollar, which is instrumental for various cryptocurrency transactions. “No games. No gimmicks. Just real stability,” the company stated on its social media platform.
Expanding Cryptocurrency Portfolio
USD1 will mark the fourth cryptocurrency that Mr. Trump and his associates have promoted within the past year. World Liberty Financial has already introduced a digital currency known as WLFI, which reportedly generated $550 million in sales this month alone, with a significant portion of those earnings—75 percent—going to Mr. Trump’s business interests. Additionally, just before his inauguration, Mr. Trump ventured into the memecoin market, a category of cryptocurrency often based on internet memes or celebrity figures, a move mirrored by Melania Trump who launched her own memecoin during the same timeframe.
Conflicts of Interest in Crypto Regulation
Mr. Trump’s aggressive push into the cryptocurrency market comes as his administration relaxes enforcement actions against crypto companies and scales back regulations. This situation raises ethical concerns regarding potential conflicts of interest, a situation largely unprecedented in U.S. history, according to government ethics specialists. The introduction of World Liberty’s stablecoin complicates this web of business conflicts further. As Congress deliberates on potential regulations surrounding stablecoins, which could land on Mr. Trump’s desk by year’s end, he has advocated for “simple, common sense rules” to bolster the U.S. dollar’s dominance in a recent crypto conference address.
Backing and Functionality of the Proposed Stablecoin
Stablecoins typically maintain their value by being pegged to assets held in reserve by the issuer. This means that users can redeem their stablecoins for cash whenever they choose. In its announcement, World Liberty Financial indicated that USD1 would be backed by short-term U.S. treasury securities, dollar deposits, and other cash equivalents. “We’re offering a digital dollar stablecoin that sovereign investors and major institutions can confidently integrate into their strategies for seamless, secure cross-border transactions,” stated Zach Witkoff, a co-founder of World Liberty and the son of Steve Witkoff, who serves as Mr. Trump’s envoy to the Middle East.
Concerns Over International Usage
The potential for international transactions raises concerns that foreign governments or business entities might leverage the new stablecoin to gain favor with Mr. Trump, according to Corey Frayer, a former crypto policy expert at the SEC under the Biden administration. “There’s a lot of opacity around this marketplace, and prior relationships with illicit finance,” Frayer noted, highlighting the risks associated with such a venture.
Shift from Skepticism to Embrace of Crypto
Once a critic of cryptocurrencies, Mr. Trump shifted his stance during his campaign last year, vowing to position the U.S. as “the crypto capital of the planet.” The cryptocurrency sector invested substantial sums to support Mr. Trump and candidates sympathetic to the industry. In September, he established World Liberty in collaboration with his three sons—Donald Jr., Eric, and Barron—as well as Steve and Zach Witkoff, relegating operational responsibilities to relatively unknown entrepreneurs, Chase Herro and Zak Folkman, who lack significant experience in the field.
A Look at World Liberty’s Aspirations and Investments
Initially, World Liberty aimed to create a comprehensive crypto platform for borrowing and lending in digital currencies, yet it has only launched WLFI and the upcoming stablecoin. Recently, the company has engaged in an acquisition strategy, amassing a diverse collection of cryptocurrencies, including Ether and lesser-known coins like SUI and LINK. In a recent discussion, Mr. Herro mentioned that World Liberty is forming a “strategic reserve” of tokens, although the ultimate goal of this accumulation remains unclear. This initiative echoes Mr. Trump’s previous proposal during his presidency to establish a U.S. stockpile of Bitcoin, a plan announced in an executive order this month.
