THE EDITOR – As Donald Trump’s administration has cut regulations for the cryptocurrency industry, the crypto firm World Liberty Financial, in which the Trump family has a large financial stake, has grown quickly by launching its own “stablecoin” and another digital token, prompting watchdogs and experts to warn of Trump’s conflicts of interest and economic hazards.
Some key congressional Democrats and watchdogs are raising new red flags about the US president’s growing conflicts of interest involving cryptocurrencies and risks to investors and the economy posed by multiple deregulatory crypto actions at federal agencies.
Since taking office again, Trump has tapped crypto industry allies to lead the Securities and Exchange Commission and to serve as his “czar” for crypto and AI who have acted fast to soften industry oversight, troubling critics. Among other moves, the SEC has dropped or put on hold probes and prosecutions of more than a dozen crypto firms.
Further, a justice department memo on 7 April announced it was disbanding a national cryptocurrency enforcement team that was set up in 2022, and had brought some high-profile cases against North Korean hackers and other crypto criminals.
The memo stressed that the Department of Justice was not a “digital assets regulator” and sought to tar the Biden administration for a “reckless strategy of regulation by prosecution”, while noting that a January pro-crypto Trump executive order spurred its decision.
Meanwhile, World Liberty Financial, which Trump’s sons Eric and Don Jr have actively promoted, unveiled its stablecoin in late March, as a stablecoin Senate bill – dubbed “the Genius act” and which critics say eases regulatory controls – moved closer to passing. A stablecoin is a cryptocurrency pegged to a traditional currency, or a more stable asset such as gold.
Critics warn that the Senate bill and a similar House bill would further ease regulations on stablecoins, as new studies and watchdogs are noting that these coins and other digital assets are increasingly being used for money laundering by Chinese exporters and producers of fentanyl and other synthetic drugs.
For his part, Trump’s enthusiasm for digital currencies was underscored in March at the first-ever “crypto summit”, where Trump pledged to end the Biden administration’s “war on crypto”.
“I promised to make America the bitcoin superpower of the world and the crypto capital of the planet,” Trump boasted to about two dozen executives from the crypto industry whom he had courted hard during his 2024 campaign and who ponied up millions of dollars to help him win. “And we’re taking historic action to deliver on that promise.”
Trump’s ardent crypto advocacy has prompted economists who follow crypto and some key Senate Democrats to voice multiple concerns about the president’s glaring conflicts of interest with the crypto sector and the broader economic threats that his deregulatory efforts are posing.
“Trump and his family are clearly eager to establish a broad foothold in the sector prior to further regulatory actions that are likely to boost crypto asset valuations,” Cornell economist and crypto watcher Eswar Prasad said. “Such investments by the Trump family take potential conflicts of interest to an altogether new level.”
More broadly, Prasad warned: “Trump’s strong interest in minimal regulation of the crypto sector, even while legitimizing it through official government imprimatur, portends enormous risks ahead for financial stability and particularly for retail investors who venture into this space. This also opens the door to crypto serving as a conduit for illicit finance and for lubricating a wide range of illegal activities.”
Similar criticisms are being raised by some top Democrats about Trump’s conflicts of interest and the dangers of loosening crypto oversight.
“Donald Trump is enriching himself and his family through their crypto businesses while his administration guts oversight of the market,” Senator Elizabeth Warren of Massachusetts said. “It’s a massive conflict of interest and a recipe for disaster.”
She added: “The SEC has already dropped enforcement actions against crypto firms tied to Trump donors and issued new guidance that could shield the first family’s own coins from scrutiny. Congress should step up and pass basic rules of the road that prevent corruption and protect consumers.”
Warren and Democratic congresswoman Maxine Waters of California, both ranking members on key panels, this month wrote to the SEC requesting information about its actions that involve Trump family interests with World Liberty Financial.
Warren and Waters focused on the SEC’s sudden decision to halt its enforcement case against controversial crypto figure Justin Sun, the leading investor in World Liberty Financial. Sun, who was sued by the SEC in 2023 for fraudulent market manipulation and other alleged misconduct, announced a $30m investment in World Liberty Financial last year which was later increased to $75m. Earlier this year, the SEC quietly halted its case against Sun, raising concerns about whether Trump’s financial interests influenced the agency’s decision-making, according to the letter.
Trump and his family have downplayed concerns about conflicts of interest.
In January, the Trump Organization said the president’s business interests including his assets and investments would be placed in a trust that his children would manage and that Trump would play no part in decision-making or daily operations. The Trump family also tapped a lawyer to act as an ethics adviser.
Nonetheless, crypto watchdogs and experts say Trump’s conflicts are underscored by the ways that the president’s political muscle to boost the crypto industry has seemed to overlap moves by World Liberty Financial to expand its crypto business.
The day before the 7 March “crypto summit”, Trump issued an executive order establishing a national stockpile of bitcoin and other kinds of cryptocurrencies, a pro-crypto industry plan that’s drawn fire from watchdogs for its economic risks.
Before Trump announced his plan, Prasad warned that creating a national bitcoin stockpile would be “neither a strategic nor sensible idea but instead benefit bitcoin holders while sticking US taxpayers with the bill and exposing the government to financial risks”.
Little wonder that the elite industry executives who attended the “crypto summit” the day after Trump’s national stockpile order greeted him with loud applause.
“Many of you have been fighting for years for this,” the president said about his various pro-crypto moves. Trump told the executives he favored “simple, commonsense rules” for stablecoins, adding that they would “expand the dominance of the US dollar”.
Just weeks later, World Liberty Financial unveiled its new stablecoin, dubbed USD1 and pegged to the dollar, which could benefit from the Trump administration’s deregulatory actions.
The growth of World Liberty Financial, which Trump only launched last September on X in a virtual briefing that included Eric and Don Jr, has been fast and eye-popping.
In explaining his new enterprise, Trump on X said that “crypto is one of those things we have to do. Whether we like it or not, I have to do it.” A white paper for the new business called Trump “its chief crypto advocate”, a notable shift from 2021, when he called bitcoin a “scam”.
According to a Reuters report in late March, World Liberty Financial has raised over $500m dollars in recent months. The Trump family now controls the bulk of the business and is entitled to about $400m in fees and 75% of revenues from World Liberty Financial’s token sales, Reuters revealed.
This article published by The Guardian with the same title on Monday, 14 April 2025. Click here to read it.
