Trump Crypto Ventures Should Stall Senate Consideration of Stablecoin Bill
By Mark Hays
The Senate is moving toward legislation to embed cryptocurrency tokens known as stablecoins into the fabric of the financial system at the very same time that a prominent person – no less than President Trump – is plumbing the depths of corruption and conflicts of interest.
A group of lawmakers is holding up the so-called GENIUS Act in the Senate. They should keep doing so until it contains ironclad guarantees against the sort of self-dealing that Trump demonstrates day after day as well as fixing the gaping, high-risk holes the bill creates for consumers and the economy
Under this legislation, stablecoins would be far from stable, pose real risks to users, and could undermine financial and economic stability. There is much to oppose in what the Senate is considering now.
But the overriding factor, at a time when the Trump-induced chaos of politics and governance is helping him get his way, is the presidential family’s cryptocurrency grift. This relatively new empire has generated an estimated $2.9 billion for the first family.
It is a jaw dropping amount. About $26 million every day he has been in office. While the rest of the country has seen prices rise and the stock market swing widely, the Trump crypto enterprise is producing a gusher of crypto wealth. And the reasons are simple: Trump is cozying up to the crypto industry and making clear that this White House can be bought, provided the means is cryptocurrency.
Trump promised to make the United States the crypto capital of the planet and proceeded to roll back regulations and enforcement, pardon crypto criminals (including the founder of Silk Road, an online narcotics and human trafficking web site), and appoint crypto sycophants to positions of power. The crypto ripoff artists have been given a green light.
One of them is the president. Trump launched a crypto business empire before the inauguration, including issuing Trump-brand memecoins (a kind of digital collectable like a Pokeman card or Beanie Baby). The Trump memecoins generated $100 million in fees for Trump, but purchasers lost $12 billion within the first month. Then Trump announced that he would host a dinner for the biggest of his memecoin buyers — selling access by selling his own products — driving a Trump memecoin dinner feeding frenzy that racked up $1.3 billion in fees for the Trump business. He also started selling Trump stablecoins from his World Liberty Financial business.
And Trump has mingled his crypto business interests with sketchy crypto bros. World Liberty Financial’s top investor is infamous banana-art-eating crypto mogul Justin Sun. Trump dropped federal fraud charges against Sun after he made his big investment in WLF. This March, the Truth Social company announced a partnership with the crypto.com trading app to jointly market crypto products. Crypto.com is a trading platform that reaps fees from each transaction and its CEO has a checkered past replete with business collapses, fast exits, and customers left holding the bag. The Financial Times reported that purchases and sales by crypto.com’s own traders massively distort prices for other users.
In early May, World Liberty Financial announced that a government backed firm in Abu Dhabi was using $2 billion in Trump stablecoins to invest in the crypto platform Binance, which has been under federal supervision due to money laundering violations. The New York Times reported the deal raised many red flags: the president taking hundreds of millions of dollars in fees from a firm controlled by a foreign government, getting entangled in a firm under considerable ongoing regulatory scrutiny, and more.
The crypto industry has been pushing legislation to give a federal seal of approval for stablecoins — including Trump’s stablecoin. This would only make it more likely that stablecoins could harm users and spur the next financial crisis. A brand new stablecoin statute could make banks and people more likely to buy the purportedly stable assets and make them vulnerable to these actually unstable assets. If the bottom drops out — like when Terra/Luna imploded in a $50 billion loss — it will impose severe economic consequences beyond just the crypto enthusiasts.
And the bill offers no safeguards whatsoever against Trump using his power to boost his family’s crypto empires. Trump’s regulatory rollbacks combined with his crypto crony capitalism spell trouble for the financial system. The beginning of the solution to the problem of crypto scams and corruption involves stopping this legislation – not fast-tracking it to enactment.
###