Trump's Meme Coin Launch Dampens Crypto Industry's Hopes for Mainstream Acceptance

President Donald Trump's goodwill in the cryptocurrency industry has taken a hit after he and his wife launched meme coins

President Donald Trump's foray into the cryptocurrency realm with his own meme coin has drawn mixed reactions, with some crypto fans expressing disappointment and concern over the move.

Trump and his wife, Melania, each announced their own meme coins on Friday, offering them to supporters as a way to show their backing for the former president. However, the move has raised questions about whether it aligns with Trump's goal of presenting crypto as a legitimate asset class.

The cryptocurrency industry, which had a strained relationship with the Biden administration and its focus on regulating digital assets, had high hopes for Trump's presidency in terms of advancing crypto's integration into mainstream financial systems.

Trump has pledged to lighten the regulatory burden on crypto and appointed officials who are supportive of the industry to key government positions. As a result, the price of bitcoin and other digital assets has surged since Trump's victory.

A lavish "Crypto Ball" was held on Friday ahead of Trump's inauguration, with tickets costing thousands of dollars and a performance by Snoop Dogg. But as the party was winding down, Trump announced his own cryptocurrency venture on social media.

The news reportedly dampened the spirits of many in the crypto community, who had hoped to distance themselves from such tactics.

"I really was kind of bummed out when I saw it," said Tom Schmidt, a partner at Dragonfly, a crypto venture capital firm. "It just felt very grifty and cheap."

Some crypto enthusiasts even joked on social media that they missed Gary Gensler, the recently departed SEC chairman who was seen as the Biden administration's main antagonist towards crypto due to the SEC's aggressive enforcement actions against crypto companies.

Meme coins are a largely unregulated and volatile segment of the cryptocurrency market. They typically begin as a joke with no inherent value but can rapidly gain in price if a critical mass of people decide to buy them.

Dogecoin, whose mascot is a Shiba Inu dog, and Fartcoin are two well-known meme coins. Scammers have also attempted to inflate the price of certain meme coins before quickly selling them off, leaving unsuspecting investors with large losses.

Despite the risks, some crypto enthusiasts welcomed the launch of the Trump meme coin, and eager buyers quickly drove up its price to over $70 each. The price fell sharply on Sunday after Melania Trump announced her own meme coin, which also experienced an initial spike followed by a significant drop.

Trump's meme coin was trading at around $45 on Tuesday afternoon, while Melania's meme coin was at about $4.

Trump named SEC Commissioner Mark Uyeda as the agency's acting chief on Tuesday, and Uyeda promptly announced the formation of a new crypto task force to guide the SEC on a "sensible regulatory path."

Trump has also promised to establish a U.S. bitcoin stockpile and enact industry-friendly regulations that would facilitate crypto companies' access to the broader financial market.

However, by closely aligning himself with meme coins, some crypto enthusiasts believe Trump may be hindering his ability to enact these reforms.

"Now, at the cusp of getting some liberalization of crypto regulations in this country, the main thing people are thinking about crypto is, ‘Oh, it's just a casino for these meme coins,'" said Nic Carter, a Trump supporter and partner at Castle Island Ventures, a crypto investment firm. "It does the opposite of validating us; it makes it look completely unserious."

The Trump meme coin sale was handled by CIC Digital, an affiliate of the Trump Organization. Trump urged his supporters to "Have Fun!" in a statement promoting the meme coin.

The website where the tokens are sold states that they are intended as a way to show support and not as an investment opportunity. According to the coin's website, 200 million Trump meme coins are currently available, with plans to issue 1 billion over the next three years.

The Trump family business recently adopted an ethics agreement that bars Trump from "day-to-day" decision-making at the Trump Organization during his presidency and restricts the sharing of financial information about the business with him.

The president and first lady were not the only ones promoting new cryptocurrencies during the inauguration week. Lorenzo Sewell, the Michigan pastor who delivered a spirited inaugural invocation on Monday, also announced the launch of a new coin named after him, which he said would benefit his church.

"I need you to do me a favor right now; I need you to go buy the official Lorenzo Sewell coin," Sewell said in a video message posted on social media.