World Liberty Financial Unveils Plans for Stablecoin
World Liberty Financial, the cryptocurrency venture co-founded by Donald J. Trump and his sons, revealed on Tuesday its intention to launch a new digital currency, a stablecoin. This move further solidifies the former president’s financial connections to the cryptocurrency sector, especially as his administration adopts a more lenient approach towards industry regulations. The stablecoin, named USD1, was announced via a post on social media, although no specific date for its release was provided. Stablecoins are a well-known category of cryptocurrency that aim to maintain a stable value, typically pegged at $1, which makes them ideal for various crypto transactions. “No games. No gimmicks. Just real stability,” the company stated on its X account.
Further Expansion of Trump’s Cryptocurrency Ventures
USD1 marks the fourth digital asset promoted by Mr. Trump and his associates in the past year. World Liberty has already launched a cryptocurrency called WLFI, which recently reported $550 million in sales, with a business entity associated with Mr. Trump retaining a significant 75 percent of the revenue. Notably, just prior to his inauguration, Mr. Trump also began marketing a memecoin— a type of cryptocurrency inspired by internet memes or celebrity figures. Simultaneously, Melania Trump introduced her own memecoin over that same weekend.
Potential Conflicts of Interest and Regulatory Challenges
As Mr. Trump aggressively ventures into the crypto realm, his administration continues to relax regulations on crypto firms, raising ethical concerns about potential conflicts of interest. Experts in government ethics have commented that this situation is unprecedented in American history. The introduction of World Liberty’s stablecoin further complicates these business conflicts. Meanwhile, Congress is deliberating on legislation aimed at regulating stablecoins that could potentially reach the former president’s desk before the year’s end. During a recent crypto conference, Mr. Trump advocated for “simple, common sense rules” regarding stablecoins, asserting that they could help “expand the dominance of the U.S. dollar.”
Backing and Intentions of the New Stablecoin
Stablecoins are typically secured by assets that the issuer holds in reserve, allowing users to redeem them for their cash equivalent. In Tuesday’s announcement, World Liberty indicated that the USD1 stablecoin would be backed by short-term U.S. treasuries, 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, one of the company’s founders and a son of Steve Witkoff, Mr. Trump’s envoy to the Middle East. The focus on international transactions raises concerns that foreign governments or businesses could utilize this coin to gain favor with Mr. Trump, as noted by Corey Frayer, a former crypto policy advisor at the Securities and Exchange Commission under the Biden administration. “There’s a lot of opacity around this marketplace, and prior relationships with illicit finance,” Frayer expressed.
Trump’s Shift in Stance on Digital Currencies
Once a skeptic of cryptocurrencies, Mr. Trump has embraced digital assets during his campaign last year, vowing to position the United States as “the crypto capital of the planet.” The cryptocurrency sector has invested substantial amounts to support Mr. Trump and finance candidates in Congress who advocate for the industry. In September, Mr. Trump established World Liberty alongside his three sons, Donald Jr., Eric, and Barron, as well as Steve and Zach Witkoff. They delegated the day-to-day operations to two relatively unknown entrepreneurs, Chase Herro and Zak Folkman, who lack extensive experience in the field.
World Liberty’s Business Strategy and Future Plans
Initially, World Liberty aimed to develop a platform allowing users to borrow and lend using digital currencies. However, to date, the company has only launched WLFI and the forthcoming stablecoin. Recently, the company has engaged in acquiring a diverse portfolio of cryptocurrencies, including Ether and lesser-known options like SUI and LINK. During a recent panel discussion, Mr. Herro mentioned that World Liberty is assembling a “strategic reserve” of tokens, though the specific purpose of this accumulation remains unclear. This strategy echoes Mr. Trump’s earlier initiative while in office, where he proposed the creation of a U.S. stockpile of Bitcoin announced in an executive order.
