Donald Trump’s controversial cryptocurrency project, World Liberty Financial (which recently raised $14 million in its first token sale), says it plans to create and issue its own stablecoin. , a source familiar with the matter told Decrypt.
Stablecoins are a type of cryptocurrency that are designed to hold stable value and are often pegged to the US dollar, but they are still in development and may take some time to launch. One source said World Liberty’s team is still considering ways to make financial products safe before they go to market.
Meanwhile, the team is working in parallel on World Liberty Financial’s major project components, including the stablecoin, and is poised to launch such features at the appropriate time, another person said. said.
Recent moves by World Liberty foreshadow the potential of a stablecoin business. Earlier this month, the project announced that Rich Teo, co-founder of stablecoin issuer Paxos, will serve as World Liberty’s head of stablecoins and payments.
Teo did not respond to Decrypt’s request for comment for this story. A representative for World Liberty Financial declined to comment.
World Liberty, which has already attracted attention and controversy with its plans to launch an Ethereum-based lending and borrowing platform directly associated with the former president and perhaps future presidents, has also announced that President Trump and his business partners are planning to launch their own platform. There is a high possibility that they will issue table coins. It offers both significantly increased risk and the opportunity for even greater rewards.
Stablecoins are an important element of the cryptocurrency ecosystem. This allows crypto traders to park their funds in a digital asset that is constructed to be fixed at a single price, even as crypto markets fluctuate. It also acts as a dollar equivalent in markets where the dollar is restricted or inaccessible, and serves as an important gateway between crypto markets and traditional financial markets.
In order to stay true to its name, stablecoins require large amounts of collateral. Circle, a top US-based stablecoin issuer, currently has $34.5 billion in regulated US financial institutions to back the $34.37 billion worth of stablecoin USDC currently in circulation. It said it has dollar-denominated assets worth $90 million.
Other stablecoin projects have attempted to circumvent this method of fiat collateralization, often by using cryptocurrencies as backing. Most notably, cryptocurrency company Terra attempted to peg its UST stablecoin to the US dollar using an algorithm tied to another in-house crypto token. This ruse worked for over a year until the price of UST collapsed to zero in May 2022, wiping out approximately $60 billion in value and decimating the broader crypto market.
The legality of stablecoins continues to be debated in the United States. The U.S. Securities and Exchange Commission (SEC) has previously sued companies like Binance for issuing stablecoins, arguing that the tokens amount to illegal unregistered securities offerings. However, stablecoin-related charges against Binance were dismissed by a federal judge earlier this summer.
Several prominent members of Congress have indicated they intend to vote on stablecoin legislation next year, and if Trump is re-elected, he would be expected to vote on stablecoin legislation as Congress decides the legality of his financial products. A surprising scenario could arise in which he takes control of the White House. It will be provided by our partners.
Despite potential legal and regulatory conflicts, stablecoins could bring huge benefits to the World Liberty team. Similar to banks, stablecoin issuers raise cash by reinvesting customer deposits into high-yield instruments such as U.S. Treasury bills. Tether, which operates the market-leading stablecoin USDT, reported record profits of $5.2 billion in the first half of 2024 alone. The British Virgin Islands-based company currently holds nearly $81 billion in Treasury bills.
Revenue generated from stablecoins could help fuel World Liberty’s future plans, but issuing a new stablecoin in an already crowded field is no easy task. Such ventures will need to broker transactions with industry-leading cryptocurrency exchanges such as Coinbase and Binance to make their assets available to a wide user base. Binance currently has a “strategic commercial partnership” with First Digital Labs, the publisher of the fifth-largest stablecoin by market capitalization, FDUSD. Coinbase co-issues the second largest USDC with Circle.
But if Trump is re-elected, he will have a uniquely powerful position in negotiations with these exchanges. Binance and Coinbase are currently the subject of protracted SEC litigation that threatens both companies’ ability to operate.
Trump also has ties to the world’s top stablecoin issuers. Tether has a “very large number” of its assets held by Wall Street asset manager Cantor Fitzgerald, according to Cantor CEO Howard Lutnick. Lutnick currently serves as co-chair of Trump’s transition team.
A large amount of capital is also required to get a collateralized stablecoin off the ground. World Liberty Financial began selling governance tokens earlier this month, but has so far managed to offload just $14.24 million worth of tokens, according to Dune data. This represents just 4.7% of the $300 million worth of tokens the project has earmarked for public sale.
Nevertheless, World Liberty Financial plans to leverage the Trump brand to emerge as the go-to service for retail investors looking to enter the opaque world of crypto trading and DeFi. There is. The project previously stated its mission was to “make crypto and America great again by driving mass adoption of stablecoins and decentralized finance.”
Mr. Trump and his crypto allies have enthusiastically championed the benefits of stablecoins in recent months, but at the same time they are also pushing back on U.S. central bank digital currencies (CBDCs) — effectively stablecoins issued by the U.S. government. He strongly denounces the danger. The former president has repeatedly promised to outlaw the creation of CBDCs if re-elected.
“Such a currency would give the federal government, our government, complete control over the people’s money,” President Trump said at a campaign event in New Hampshire earlier this year. Ta.
“They may take your money,” he added. “You won’t even notice it’s gone.”
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