With the Trump administration’s rollback of regulations affecting the cryptocurrency sector, the crypto company World Liberty Financial, which has significant financial backing from the Trump family, has expanded rapidly by launching its own “stablecoin” and another digital asset. This has raised alarms among watchdogs and experts who highlight potential conflicts of interest and economic dangers tied to Trump’s actions.
Prominent congressional Democrats and regulatory organizations are voicing concerns regarding the escalating conflicts of interest for the US president connected to cryptocurrencies, as well as the risks posed to investors and the economy by various deregulation measures from federal agencies.
Since resuming his presidency, Trump has appointed allies from the crypto industry to lead the Securities and Exchange Commission and to act as his crypto and AI czar, quickly implementing measures that diminish oversight for the sector, which has troubled critics. Among other actions, the SEC has ceased or paused investigations and prosecutions involving over a dozen crypto companies.
Additionally, a memo from the Department of Justice on April 7 revealed the disbanding of a national cryptocurrency enforcement team that had been established in 2022, which had successfully prosecuted high-profile cases against North Korean hackers and other cryptocurrency criminals.
The memo emphasized that the DOJ was not intended to be a “digital assets regulator” and criticized the Biden administration for what it described as a “reckless strategy of regulation by prosecution,” also noting that a pro-crypto executive order signed by Trump in January influenced this decision.
Simultaneously, World Liberty Financial, actively promoted by Trump’s sons Eric and Don Jr, launched its stablecoin in late March, coinciding with the advancement of a Senate bill – referred to as the “Genius act,” which critics argue reduces regulatory oversight. A stablecoin is a type of cryptocurrency that is pegged to a traditional currency or a more stable asset like gold.
Critics express concerns that both the Senate and a similar House bill would further reduce regulations on stablecoins, particularly as new research and watchdogs indicate that such coins and other digital assets are increasingly utilized for money laundering by Chinese exporters and producers of fentanyl and other synthetic drugs.
Trump’s support for digital currencies was highlighted in March at the inaugural “crypto summit,” where he promised 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 declared to approximately two dozen executives from the crypto industry, who had provided substantial financial support for his 2024 campaign. “And we’re taking historic action to deliver on that promise.”
Critics, including economists who monitor cryptocurrencies and key Senate Democrats, have raised multiple concerns regarding the president’s glaring conflicts of interest within the crypto sector and the broader economic risks associated with his deregulatory measures.
“Trump and his family are clearly eager to establish a significant presence in the sector before further regulatory measures that could inflate crypto asset values,” remarked Eswar Prasad, a Cornell economist and crypto expert. “Such investments by the Trump family elevate potential conflicts of interest to an entirely new level.”
Prasad further warned: “Trump’s strong desire for minimal regulation within the crypto sector, while simultaneously legitimizing it through government endorsement, poses significant risks for financial stability and particularly for retail investors diversifying into this market. This also creates opportunities for cryptocurrencies to facilitate illicit financing and to aid in various illegal activities.”
Similar concerns regarding Trump’s conflicts of interest and the perils of easing crypto regulations are shared by several leading Democrats.
“Donald Trump is enriching himself and his family through their crypto ventures while his administration destroys oversight of the market,” stated Senator Elizabeth Warren from Massachusetts. “It’s a glaring conflict of interest and a recipe for disaster.”
She continued: “The SEC has already terminated enforcement actions against crypto firms connected to Trump donors and provided new guidelines that could exempt the first family’s coins from scrutiny. Congress must intervene and establish fundamental rules to prevent corruption and safeguard consumers.”
This month, Warren alongside Democratic Congresswoman Maxine Waters of California, both of whom serve on pivotal committees, reached out to the SEC for details on its actions concerning Trump family interests tied to World Liberty Financial.
Their letter highlighted the SEC’s abrupt decision to halt its enforcement case against the controversial crypto figure Justin Sun, a major investor in World Liberty Financial. Sun was sued by the SEC in 2023 for allegations of market manipulation and other misconduct, and his $30 million investment in World Liberty Financial was later increased to $75 million. Earlier this year, the SEC quietly suspended its case against Sun, raising questions about whether Trump’s financial interests influenced this action, as noted in their letter.
The Trump family has sought to minimize concerns regarding conflicts of interest.
In January, the Trump Organization stated that the president’s business interests, including his assets and investments, would be placed into a trust managed by his children, with Trump having no involvement in decision-making or daily operations. The family has also appointed a lawyer to serve as an ethics adviser.
Nevertheless, cryptocurrency watchdogs and experts argue that Trump’s conflicts are underscored by the overlap between his political influence in advancing the crypto industry and the concurrent expansion efforts by World Liberty Financial.
Just a day before the “crypto summit” on March 7, Trump enacted an executive order creating a national stockpile of bitcoin and other cryptocurrencies, a pro-crypto initiative that has faced criticism from watchdogs due to its economic implications.
Prasad previously warned that establishing a national bitcoin stockpile would be “neither a strategic nor sensible idea, but rather benefit bitcoin holders while burdening US taxpayers and exposing the government to financial risks.”
It’s no surprise that the elite industry executives attending the “crypto summit” the day after Trump’s national bitcoin stockpile announcement welcomed him with enthusiastic applause.
“Many of you have been advocating for this for years,” Trump remarked about his numerous pro-crypto initiatives. He informed the executives that he supported “straightforward, sensible rules” for stablecoins, asserting that these would “strengthen the dominance of the US dollar.”
Shortly thereafter, World Liberty Financial introduced its new stablecoin, named USD1 and pegged to the dollar, which could benefit from the administration’s deregulation policies.
World Liberty Financial, which Trump showcased in a virtual briefing in September that featured Eric and Don Jr, has seen rapid and impressive growth.
While introducing his new venture, Trump stated on X that “crypto is one of those things we must engage with. Whether we like it or not, I must pursue it.” A white paper for the new endeavor referred to Trump as “its chief crypto advocate,” a significant change from 2021 when he labeled bitcoin a “scam”.
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As reported by Reuters in late March, World Liberty Financial has raised over $500 million in recent months. The Trump family now holds the majority of the business, entitled to approximately $400 million in fees and 75% of revenues from World Liberty Financial’s token sales, according to Reuters.
In a notable crypto initiative just days before his inauguration, Trump started promoting $Trump, a meme coin. Memecoins are digital currencies often based on viral online jokes that attract enthusiasts and speculators.
To further advance crypto and the family business interests, Trump has incorporated cryptocurrency into his social media strategy through the Trump Media & Technology Group, which is the parent company of Truth Social.
Last month, Trump Media announced plans to collaborate with Crypto.com, a digital currency trading platform, to offer investment products related to cryptocurrency.
Trump’s positive outlook on cryptocurrency and his family’s ventures found an ally in Don Jr during a crypto conference in Washington DC organized by an industry trade group.
While speaking on a panel, Don Jr expressed that his interest in crypto was ignited by recognizing how the traditional financial system has been “discriminatory” towards conservatives. “The sky is the limit for this,” he remarked.
In yet another crypto-related venture, Don Jr and Eric announced in late March that they were investing in a bitcoin-mining operation to establish a new entity called American Bitcoin.
The ambiguous intersection of the Trump family’s World Liberty Financial with the administration’s easing of crypto regulations is raising new alarms about conflicts of interest.
“Presidents typically strive to avoid even the perception of conflicts of interest,” stated Kedric Payne, general counsel and senior director of ethics at the nonpartisan Campaign Legal Center. “Trump’s ties to the crypto industry extend well beyond appearance; his financial stakes in crypto represent a significant conflict, as he is actively promoting legislation favoring the sector.
“Voters deserve to know that the president prioritizes the ethical integrity of the office over profiting from his own policies.”
Other watchdogs echo similar apprehensions regarding conflicts of interest related to Trump.
“Crypto investors have already incurred millions in losses betting on the Trump memecoin, while Trump and his associates at World Liberty have profited from these through fees,” remarked Mark Hays, associate director for cryptocurrency at the nonpartisan Americans for Financial Reform.
“With the introduction of a Trump-backed stablecoin, [World Liberty Financial] and Trump are effectively generating their own private currency, while advocating for legislation with relaxed regulations, overseen by crypto allies within regulatory agencies, and daring anyone to challenge them.”
Senator Warren has also voiced robust concerns regarding the Senate stablecoin bill, which has attracted some bipartisan support, fearing it could dangerously relax oversight.
“Rather than addressing the actual risks posed by crypto money laundering, Senate Republicans are advancing the so-called Genius act without essential safeguards – thereby allowing criminals, terrorists, drug cartels, and foreign adversaries to exploit the financial system.”
These warnings regarding the utilization of crypto by drug cartels and other criminals hold newfound urgency, following recent research unveiling the increasing use of cryptocurrency by Chinese manufacturers and exporters of fentanyl and other hazardous synthetic substances.
Kyle Armstrong, a former FBI agent now associated with TRM Labs, which collaborates with law enforcement globally to document and combat drug-money laundering, noted escalating concerns regarding “synthetic opioid production and sale involving cryptocurrency.”
“The majority of factories producing precursor materials for synthetic opioids are located in China,” Armstrong stated. A March report from TRM Labs regarding fentanyl indicated that of 120 factories analyzed, 97% accepted cryptocurrency, with $26 million in crypto transactions occurring in 2023.
Cryptocurrency-enabled illicit drug sales overall witnessed a year-over-year increase of more than 19% between 2023 and 2024, nearing $2.4 billion.
These findings could amplify the concerns of watchdogs and crypto experts regarding the extensive implications of Trump’s crypto deregulation and the risks tied to the Senate stablecoin bill.
“Trump’s deregulation of crypto isn’t about fostering innovation,” Warren concluded. “It signifies the opening of the door to increased fraud, more pump-and-dump schemes, and heightened financial instability that endangers everyday Americans.”
