Trump family's crypto project WLFI is planning to release a stablecoin, raising concerns over the US president's exposure to the digital asset industry.

World Liberty Financial (WLFI), the Trump family's crypto project, is planning to release a stablecoin, raising concerns over the US president's exposure to the digital asset industry. By Stesh*

World Liberty Financial (WLFI), the Trump family’s crypto project, is planning to release a stablecoin, raising concern over the US president’s exposure to the digital asset industry.

The project released a memecoin immediately prior to President Donald Trump’s inauguration, the price of which skyrocketed and crashed soon after, causing many to accuse WLFI of a pump-and-dump scheme.

WLFI has also made multimillion-dollar purchases of crypto tokens immediately prior to important crypto-related events the president has attended or announcements influencing the industry. WLFI purchased $20 million of various tokens ahead of the March 7 White House Crypto Summit.

As World Liberty Financial’s portfolio grows and regulator oversight disappears from the crypto industry, observers and legal scholars are becoming increasingly concerned over conflicts of interest within the Trump administration.

Son Eric Trump pumps his father's memecoin ahead of the inauguration. Source: Eric Trump

Trump’s stablecoin USD1 riddled with liabilities

Announced on March 25, WLFI will launch the new stablecoin USD1, “100% backed by short-term U.S. government treasuries, U.S. dollar deposits, and other cash equivalents.”

It can be used for “seamless, secure cross-border transactions,” according to WLFI co-founder Zach Witkoff.

News of USD1’s forthcoming release came just days after WLFI secured more than $500 million through the sale of its own $WLFI tokens. Observers have already begun to raise the alarm about the possibility of security risks or market manipulation.

There are also concerns over the possibility of violations of the emoluments clause of the U.S. Constitution — a section of the document that protects against undue influence over American leaders — and the potential for foreign powers to funnel investments into Trump’s ventures in a bid to gain political favors.

As regards the latter, cyber and digital media attorney Andrew Rossow told Cointelegraph that the stablecoin is “a direct affront to constitutional safeguards meant to prevent conflicts of interest.”

“With Trump and his family controlling 60% of World Liberty’s equity interests, the USD1 stablecoin could facilitate indirect financial gains or undue foreign influence over U.S. policy, particularly if foreign entities invest in or use the stablecoin.”

Credit: Fortune

According to reports by Fortune, Trump’s role in World Liberty Financial makes up a sizeable chuck of his estimated net worth.

Corey Frayer, who worked on crypto policy at the SEC under former President Joe Biden, said that the project’s emphasis on cross-border payments was particularly worrisome and that foreign entities may invest as a way to gain favor with Trump.

“There’s a lot of opacity around this marketplace, and prior relationships with illicit finance,” Frayer told The New York Times.

U.S. policymakers have already noted the possibility for foreign influence following the launch of Trump’s eponymous memecoin in January.

At the time, Democratic Representative Maxine Waters — a top Democrat on the House Financial Services Committee — wrote that “Anyone globally, even individuals who have been sanctioned by the U.S. or banned from our capital markets, can now trade and profit off of $TRUMP through various unregulated platforms.”

In addition to potential foreign influence, observers are concerned that Trump’s crypto ventures could threaten market stability and integrity, and open up global markets to manipulation.

Referencing USD1, Heath Mayo — the founder of the Trump-alternative conservative movement Principles First — said that a sitting president issuing an instrument backed by public debt should be illegal, adding that the project had “terrible incentives and corrupt use of U.S. taxpayer credit.”

Rossow said that the president’s role in a stablecoin project while at the same time working to craft stablecoin legislation in the form of the GENIUS Act is “a constitutional violation that could destabilize regulatory integrity.”

Trump’s influence over the industry and ability to drop enforcement actions against crypto executives who support him creates “an uneven playing field, disadvantaging competitors and violates principles of equal protection under the law.”

What options do regulators have regarding Trump’s crypto conflicts of interest

Trump, who has long stated an affinity with former President Andrew Jackson, seems to be holding to the latter’s strategy of acknowledging judicial rulings — and then doing what he wants.

The presidential administration has already shown that it is willing to defy orders from federal judges when, earlier this month, it ignored a verbal order from a federal judge to turn around two planes full of alleged gang members bound for the Terrorism Confinement Center in El Salvador.

Regarding crypto, Senator Elizabeth Warren has already called for an ethics probe into Trump’s crypto activities. She said that the president’s memecoin “massively enriched Trump personally, enabled a mechanism for the crypto industry to funnel cash to him, and created a volatile financial asset that allows anyone in the world to financially speculate