TRUMP Coin Raises Major Tax and Legal Questions

With the latest launch of his meme coin TRUMP, he's become the first president to bring political influence into the meme coin market. However, this move raises several legal and tax challenges.

Former US President Donald Trump has recently made waves in the crypto industry with the launch of his meme coin, aptly named TRUMP.

This marks the first time a president has brought political influence to the meme coin market. While the move is certainly attention-grabbing, it also raises several legal and tax questions.

According to FinTax, a web3 financial management firm, one of the primary concerns is whether TRUMP can be legally classified as a security.

“First, there’s the question of whether this meme coin is a security. This is super important for its legality,” FinTax said.

Cryptocurrencies sold through Initial Coin Offerings (ICOs) are typically considered securities. However, Trump’s team has maintained that the coin is not a security.

The TRUMP website states that it does not promise any future profits.

Despite this declaration, the possibility of an SEC investigation remains, especially given the lack of clear regulatory stance on meme coins.

Another concern is the potential for TRUMP to be used to circumvent legal restrictions on political donations.

The Federal Election Commission (FEC) has strict rules governing political donations, and launching a meme coin could open up new avenues for fundraising that fall outside of traditional regulations.

If TRUMP is found to be facilitating political donations, it could raise red flags and lead to legal challenges. While there is no evidence yet to suggest that the coin is being used for this purpose, the potential for controversy remains high.

Beyond the legal questions, FinTax also highlights a tax issue surrounding the launch of TRUMP.

As per the Internal Revenue Service (IRS), cryptocurrency profits are subject to taxation, and understanding how taxes apply to TRUMP could be a complex matter.

It is reported that Trump’s team currently holds 80% of the total TRUMP supply, which they will unlock in stages over the next three years.

The question arises whether unlocking these coins will be considered a taxable event by the authorities. Generally, capital gains tax is only triggered when an asset is sold or traded.

However, depending on how the authorities choose to view the matter, unlocking the crypto could be subject to taxation.

Meanwhile, crypto experts are speculating on possible tax cuts in the wake of TRUMP's launch.

According to CoinGecko, Trump is now the third-largest meme coin with a market cap of $11.7 billion.

Members of the crypto community are expressing hope that Donald Trump's newfound crypto wealth will inspire him to implement tax reforms.

“Trump is up around $20 billion on his token. That means an extra $5 billion in his pockets if he eliminates capital gains on crypto… The President of the United States now has a personal multi-billion dollar incentive to eliminate crypto capital gains tax,” crypto trader Gammichan noted.

suggesting that Trump may have a strong personal interest in reducing or eliminating capital gains tax on cryptocurrency.

Highlighting a similar possibility, crypto investor Mike Alfred stated, “Now that 80% of Trump’s wealth consists of crypto, you can expect an end to all federal income taxes on crypto sales within the year. This is how the game is played. Watch and learn (and buy some Bitcoin for the kids).”