As the previous presidential administration, led by Donald Trump, rolled back numerous regulations impacting the digital currency sphere, a company known as World Liberty Financial has experienced significant growth. This firm, in which the Trump family maintains a substantial financial interest, has introduced its own “stablecoin” along with a separate digital token. These developments have triggered warnings from regulatory observers and financial analysts regarding potential conflicts of interest and escalating economic vulnerabilities.
Prominent members of Congress, particularly from the Democratic party, and various oversight groups are expressing heightened concerns about potential conflicts of interest surrounding the former president’s involvement in cryptocurrencies. They also highlight the potential risks to investors and the broader economy arising from loosened regulations at several federal agencies.
Since returning to office, the former president has appointed individuals with strong ties to the digital asset industry to key positions, including leadership roles at the Securities and Exchange Commission (SEC) and a special advisory role on cryptocurrency and Artificial Intelligence. Critics are worried about recent actions which have eased oversight. The SEC has notably suspended or discontinued investigations into several cryptocurrency businesses.
Adding to the scrutiny, an internal memo from the Justice Department, dated April 7th, publicly announced the cessation of operations for a specialized national task force dedicated to cryptocurrency enforcement. This unit, established in 2022, was responsible for prosecuting high-profile cases involving North Korean hackers and various other digital currency-related criminal activities.
The memorandum emphasized that the Justice Department does not consider itself a “digital asset regulator”. The memo further attempted to negatively portray the prior administration’s strategies regarding regulation through prosecution. The department justified the decision by alluding to an executive order issued by Trump which favored digital currencies.
In parallel, World Liberty Financial, which has received active promotion from Eric and Don Jr. Trump, recently launched its stablecoin in late March. This event coincides with the advancement of a stablecoin bill in the Senate – often called the “Genius Act” – which critics contend would drastically reduce regulatory control. A stablecoin is defined as a cryptocurrency linked to a traditional currency like the U.S. dollar, or a more reliable asset such as gold.
Detractors caution that the proposed Senate legislation, alongside similar bills in the House, could further weaken regulatory constraints on stablecoins. Recent studies and watchdog investigations point to their increasing use for illicit activities, such as money laundering by Chinese exporters and manufacturers of fentanyl as well as other synthetic substances.
Trump’s advocacy for cryptocurrencies was clearly highlighted during the inaugural “crypto summit” held in March, where he vowed to end what he described as the Biden administration’s “war on crypto.”
“I pledged to position the United States as the world’s leading power in Bitcoin and the ultimate digital currency hub,” Trump stated to a select group of cryptocurrency executives who had contributed significantly to his 2024 campaign. “And we are taking decisive action to fulfill this pledge.”
This strong backing of digital currencies has prompted economists who have studied these currencies, as well as leading Senate Democrats, to voice strong concerns regarding the former president’s glaring conflicts of interest and the potential risks that deregulation poses to the wider economic structure.
“Trump and his family seem to be positioning themselves for an expansive involvement in the sector, particularly before potential regulatory actions which could substantially increase the value of crypto assets,” commented Cornell economist and cryptocurrency expert Eswar Prasad. “These investments by the Trump family elevates conflict of interest questions to a new level.”
Expanding upon this, Prasad warned: “Trump’s strong interest in minimal regulation of the digital currency sector, while lending legitimacy through official government endorsement, presents considerable risks to financial stability and, specifically, to small investors entering the sector. This also sets up conditions for crypto to serve as a vehicle for illicit financing and for enabling various criminal activities.”
Leading Democrats are expressing similar concerns surrounding the potential conflicts of interest and the potential hazards of weakening cryptocurrency regulations.
“Donald Trump is enriching himself and his family through cryptocurrency ventures, concurrently his administration is gutting market oversight,” commented Senator Elizabeth Warren of Massachusetts. “This represents a serious conflict of interest and could lead to disaster.”
She added, “The SEC has already dropped actions against crypto firms linked to Trump donors and has also published updated guidance that would shield the first family’s coins from scrutiny. Congress must act immediately and establish basic rules that will prevent corruption and protect consumers.”
Both Warren, alongside Democratic congresswoman Maxine Waters of California, who are each ranking members of key panels, recently communicated to the SEC requesting information on the agency’s actions involving Trump family interests specifically relating to World Liberty Financial.
Warren and Waters focused upon the SEC’s decision to suspend its enforcement case against controversial crypto figure Justin Sun, a leading investor in World Liberty Financial. Sun, faced lawsuits from the SEC in 2023 for potentially fraudulent market manipulation, announced a $30 million investment into World Liberty Financial last year which eventually increased to $75 million. Earlier this year, the SEC quietly suspended its case against Sun, which raised questions regarding whether Trump’s financial ties had influenced the agency’s decision making, according to the letter.
Trump and his family have consistently minimized concerns over these potential conflicts.
In January, the Trump Organization communicated that the President’s business interests, inclusive of assets and investments, would be held in a trust managed by his children and that Trump himself would not be participating in decision-making or daily operations. The Trump family further retained a lawyer to function as an ethics advisor.
Still, experts have stated that Trump’s conflicts are shown by the way that the president’s political influence on the crypto industry has seemingly overlapped with World Liberty Financial’s expanding business in crypto.
One day before the “crypto summit” which took place on March 7th, Trump issued an executive order establishing a national reserve of bitcoin and various cryptocurrencies. This has drawn criticism for the economic risks of the industry plan.
Prior to Trump’s announcement, Prasad cautioned that generating a national bitcoin stockpile would neither be a strategic or sensible idea, as this would only benefit Bitcoin holders and expose US taxpayers to financial risks.
It should be no surprise that the elite industry executives present at the “crypto summit” who were there following Trump’s order for a stockpile, greeted him with a warm reception.
“Many of you have been fighting for years for this,” the President stated in regard to his multiple cryptocurrency efforts. Trump told the executives that he favored “simple, common sense rules” for stablecoins, adding that they would “increase the strength of the U.S. dollar.”
Mere weeks later, World Liberty Financial released its new stablecoin, named USD1 and tied to the U.S. dollar, which may well benefit from the current deregulation coming from the administration.
The rapid expansion of World Liberty Financial, which Trump launched publicly on X in September, with Eric and Don Jr., has been stunning.
While describing the new enterprise on X, Trump stated that “crypto is something that has to be done. Whether we like it or not, I have to do it.” A report on the new business called Trump “its chief crypto advocate”, a large shift from 2021, when he had previously called bitcoin a scam.
According to a recent report, World Liberty Financial has accumulated over $500M in the past months. The Trump family now has control over the majority of the business and is allocated an amount of $400M in revenue from token sales.
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Prior to his inauguration, Trump also began promoting $Trump, a memecoin. Memecoins are various types of digital currencies based on viral online jokes that are popular among online fans.
In efforts to advertise the family crypto venture, Trump has been including crypto in his social media via the Trump Media & Technology Group.
Trump Media has planned to work with Crypto.com to provide investing opportunities linked to crypto.
Trump’s enthusiasm for crypto was echoed by Don Jr. at a cryptocurrency conference in Washington, DC.
Trump Jr. stated that his interest in crypto came from how the general financial system was discriminating against conservatives. “The sky is the limit for this,” he said.
Don Jr. and Eric announced that they will be investing in bitcoin-mining to create American Bitcoin.
The overlap between the Trump family’s World Liberty Financial and the crypto deregulation is triggering new alarms about conflicts of interest.
“Presidents avoid the appearance of conflicts of interest,” said Kedric Payne, general counsel and senior director for ethics at the Campaign Legal Center. “Trump’s connection to the crypto industry is more than that. His financial interests are a current conflict because he is backing laws to help the industry.”
“Voters need to know that the president focuses on the ethical integrity of his position rather than profiting from his own policies.”
Other watchdogs have raised concerns involving Trump.
“Crypto investors lost money on the Trump memecoin, as Trump and World Liberty made millions,” said Mark Hays, the associate director for cryptocurrency at Americans for Financial Reform.
“With the Trump-backed stablecoin, World Liberty and Trump are effectively creating their own currency while pressuring Congress to pass regulations overseen by crypto-friendly people in regulatory agencies, daring anyone to object.”
Warren also has concerns that the stablecoin bill will loosen oversight.
“Instead of addressing the dangers posed by crypto money laundering, Senate Republicans are pushing the Genius act without safeguards, which would pave the way for criminals, terrorists, drug cartels and foreign adversaries to exploit the financial system.”
Such warnings about crypto have taken on new urgency as studies revealed the use of crypto by Chinese fentanyl manufacturers.
Kyle Armstrong, a former FBI agent who works with law enforcement to combat illicit drug money laundering, said that there are growing worries about synthetic opioid production that uses cryptocurrency.
Armstrong said, “The majority of the precursor materials come from Chinese factories.” A TRM Labs report found that 97% of 120 Chinese factories accepted cryptocurrency, worth $26M in 2023.
Cryptocurrency-enabled drug sales saw a growth of over 19% between 2023 and 2024, reaching $2.4 billion.
These could fuel the fears of Trump’s crypto deregulation and the passage of the stablecoin bill.
Warren said “Trump’s deregulation will mean more fraud and instability that puts Americans at risk.”