Unlock the White House Watch newsletter for free
Your guide to what the 2024 US election means for Washington and the world
World Liberty Financial, the cryptocurrency group backed by Donald Trump and his sons, will launch its own stablecoin to tap into a market the US president has made a policy to promote.
The token, called USD1, is the highest-profile product from the crypto project, which was founded in the run-up to November’s presidential election.
The new coin highlights how Trump and his associates are seeking to profit from the resurgent digital asset market, at a time when the president is also advocating for more crypto friendly policies. Some critics have argued this approach raises concerns over conflicts of interest.
A separate Trump crypto project made at least $350mn from the launch of a so-called “memecoin” called $TRUMP, which has no intrinsic value, the Financial Times reported earlier this month.
WLF’s foray into stablecoins comes as policymakers in Washington debate legislation that would regulate and encourage the financial products in the US. Trump also signed an executive order in January, pledging to promote “lawful and legitimate” dollar-backed stablecoins, to protect the sovereignty of the US currency, marking a significant departure from Joe Biden’s administration, which had taken a far more sceptical view.
The tokens are a form of private banknote that are designed to hold a constant value of a dollar per coin. They act as a reserve of cash outside the regulated banking system and are widely used in cryptocurrency markets. More than $250bn worth are in circulation. Two cryptocurrency groups, Tether and Circle dominate the stablecoin market.
However, their rise has prompted concerns among regulators in the US and abroad about potential risks to financial stability and new avenues for consumer fraud. Policymakers in Washington are debating laws which could set qualifications for issuers such as holding adequate reserves and proper public disclosure.
World Liberty, which lists Trump as its ‘chief crypto advocate’ and US special envoy to the Middle East Steve Witkoff as a co-founder, said USD1 would be pegged to the US dollar and backed by short-term US Treasuries and other cash equivalents. It also said it would take a “conservative” approach to stablecoins that it says “offers the clarity and security required for broader institutional adoption”.
Zach Witkoff, co-founder of WLF and son of Steve Witkoff, said: “USD1 provides what algorithmic and anonymous crypto projects cannot — access to the power of [decentralised finance] underpinned by the credibility and safeguards of the most respected names in traditional finance.”
Since its launch WLF has raised more than $1bn from the sale of 26bn tokens, which give holders only limited voting rights, no economic rights, and cannot be traded.
The investors include $75mn of purchases by Justin Sun, the crypto entrepreneur who bought and ate a $6mn banana artwork in November.
A long-running lawsuit between Sun and US securities regulators over allegations of fraud and other securities law violations was paused in February while both sides committed to discussing a resolution. He has denied the allegations.
The World Liberty project has deepened the Trump family’s ties with the cryptocurrency market. Trump Media, which runs the Truth Social platform and is majority owned via a revocable trust, said late on Monday it would partner with Crypto.com for the launch of crypto-focused exchange traded funds that will use the “Truth.Fi” brand.
Shares in Trump Media rose 5.8 per cent on Tuesday.
Read the full article here
