Trump’s Stablecoin USD1 Sparks New Wave of Conflict

WLFI’s History Raises Eyebrows

WLFI is not new to controversy. Before Trump’s second presidential term, the project launched a memecoin. The coin’s price soared fast but quickly crashed, leading to accusations of a pump-and-dump scheme.

Since then, WLFI has made suspicious moves. The company often buys large amounts of crypto just before major government crypto events. One example is the $20 million worth of tokens WLFI purchased before the White House Crypto Summit on March 7.

Critics are concerned that Trump’s direct connection to WLFI could give him unfair influence. As WLFI’s portfolio grows and regulatory oversight weakens, many fear that Trump could shape policies to benefit his own company.

USD1 Stablecoin Brings More Risks

WLFI announced USD1 on March 25. The company claims it will be “100% backed by short-term US government treasuries, US dollar deposits, and other cash equivalents.” According to Zach Witkoff, WLFI’s co-founder, USD1 will make cross-border transactions faster and safer.

However, concerns grew stronger after WLFI recently raised $500 million through its own token sale.

Critics now worry that USD1, being linked to the sitting president, could:

• Allow foreign entities to gain influence.
• Undermine trust in financial regulations.
• Risk manipulation of crypto markets.
• Violate the US Constitution’s emoluments clause.

Andrew Rossow, a cyber law expert, called it a “direct affront to constitutional safeguards.” He explained that since the Trump family owns 60% of WLFI, foreign entities could use USD1 to gain favors.

Key Concerns Around USD1

Former Officials Share Warnings

Corey Frayer, an ex-SEC crypto policy expert, said USD1’s focus on cross-border payments is alarming. He noted that foreign actors could invest in it to get closer to the administration.

Democratic lawmaker Maxine Waters also warned that even sanctioned individuals might now trade Trump’s memecoin and possibly USD1. This raises the risk of bad actors gaining access to US-linked financial assets.

Critics Demand Action

Heath Mayo, founder of Principles First, believes it is “dangerous” for a sitting president to issue a coin backed by public debt. He sees it as a misuse of taxpayer credit.

Rossow pointed out another major issue. While Trump is promoting USD1, he is also shaping stablecoin regulations through the GENIUS Act. This dual role creates a potential “constitutional violation” and harms fair competition.

What Could Be Done?

Senator Elizabeth Warren has already called for an ethics investigation. She accused Trump’s crypto dealings of enriching him personally and putting financial markets at risk.

Rossow suggested other agencies could step in. The Financial Crimes Enforcement Network (FinCEN) and state regulators might still act, even if Congress is slow. He also said that international regulators could pressure the US for stronger crypto rules.

He stressed that immediate action is needed to “safeguard fair governance” and protect the global financial system.

Mixed Opinions Inside the Industry

Not everyone sees trouble. Some in the crypto world view this as a sign of crypto going mainstream.

Chris Barrett from Chainlink praised USD1, saying it could boost the dollar’s global dominance. Arnoud Star Busmann, CEO of Quantoz Payments, believes stablecoins like USD1 will make crypto more accessible for traditional finance.