Stablecoin USD1- Senate Challenges Trump-Linked Stablecoin Over Financial Risks
Stablecoin USD1– Five Democratic lawmakers in the US Senate have expressed serious concerns over potential conflicts of interest surrounding the launch of a new stablecoin by World Liberty Financial (WLFI), a crypto firm backed by the family of US President Donald Trump.
In a letter sent on March 28, Massachusetts Senator Elizabeth Warren, along with four other Democratic colleagues, addressed the Federal Reserve’s committee chair on supervision and regulation, Michelle Bowman, and acting Comptroller of the Currency Rodney Hood. They urged the regulators to assess how they planned to handle the potential risks posed by WLFI’s stablecoin, USD1. This letter was sent amid discussions in Congress regarding the regulation of stablecoins, as lawmakers are considering the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins). This legislation, if passed, would give the Office of the Comptroller of the Currency (OCC) and the Federal Reserve authority to regulate stablecoins, including those issued by companies like WLFI.
Trump’s Influence Raises Red Flags
The concerns are amplified by the fact that WLFI is linked to President Trump, who signed an executive order in February directing federal agencies to regularly coordinate with White House officials, including the OCC. The letter points out that this involvement, combined with the potential financial benefits for the Trump family, creates a significant conflict of interest. “The launch of a stablecoin directly tied to a sitting president who stands to benefit financially presents unprecedented risks to our financial system,” the lawmakers wrote.
WLFI, launched in September 2024, just months before the US election, has kept much of its goals and operations under wraps. The company’s website reveals that Trump and his family control 60% of the company’s equity. Despite limited transparency, the firm has already raised $550 million through two public token sales, and launched its first stablecoin, USD1, on March 24 on the BNB Chain and Ethereum.
Trump’s son, Donald Trump Jr., also promoted the USD1 token at the DC Blockchain Summit, further solidifying the firm’s ties to the Trump family. As the debate continues, lawmakers and regulatory bodies are under pressure to ensure that the launch of such financial products doesn’t undermine the integrity of the financial system.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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