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Your Guide to What Trump’s Second Season Means Washington, Business and World
Donald Trump has been on a considerable journey since the days when Bitcoin said it was “like a scam.” This week, the Trump Family Media Company said it was raising $2.5 billion from investors to acquire cryptocurrency. His sons, Eric and Donald Jr., have pledged Bonanza to an orange Bitcoin investor in Las Vegas. This has reached a recent record of optimism that US lawmakers will soon agree to the first cryptocurrency regulations for stubcoin, or digital tokens that are pinned to dollars or another currency, as his vice president JD Vance told the same meeting, “Crypto has finally had a champion and an ally in the White House.”
However, the Trump family’s enthusiasm for crypto ventures and the pro-crypto stance of his administration creates an obvious conflict of interest. Willingness to justify often unstable crypto assets could inject new risks into the financial system.
Most presidents and their families associate themselves very closely with one industry. The US leader promoted his $Trump Memecoin and hosted a gala dinner for the largest owner. World Liberty Financial, which lists Trump as a “Crypto Advocate,” has launched Stablecoin, USD1, which has acquired a dollar, currently market value of $2.15 billion.
Within days of returning to the office, Trump’s executive order revoked Biden-era measures aimed at limiting crypto risk, and committed to promoting “leadership in digital assets and financial technology.” Another order was established to create a strategic Bitcoin reserve. The President has appointed crypto advocates to key roles, including Paul Atkins and chairman of the Securities and Exchange Commission.
The incoming government has moved from “regulation by enforcement” to efforts to create a regulatory framework for encryption and development. The Department of Justice, together with the SEC, has dropped several cases against crypto companies. Crypto lovers have long proposed that courts provide regulatory clarity through Congress rather than strengthening innovation and legitimate crypto businesses. However, a more tolerant environment risks amplifying the risks of fraud and market manipulation.
Until recently, it was thought that the benefits of the Trump family’s own code could be a block to legislative efforts. A group of Democratic senators refused to support the so-called genius law to regulate stubcoins, except for measures to prohibit elected officials and their families (including the president) from owning or participating in Stablecoin Ventures. But they joined Republicans this month to allow the bill to move forward, arguing that the need for clear rules will be prioritized.
The bill sets valuable rules, including requiring US stubcoin issuers to maintain an amount equivalent to 100% of the outstanding coin, the US Treasury or equivalent, and sets out a clear redemption procedure. However, some senior Democrats warn that consumer protection is inadequate, allowing them to exchange offshore-issued stubcoins, such as Tether. Stubcoins exist in a grey world that behaves like banks, payment systems, and securities, but are not regulated as any of them. The Genius Act offers a very light touch framework.
Advocates of digital assets argue that it can speed up payments and increase financial inclusiveness. However, these benefits could be exploited more safely through central bank digital currencies. Trump is vigorously opposed to the US CBDC, claiming instead that private stubcoins will “expand control of the US dollar.” Unless they are policed very carefully, they may just be against it.
