In a recent development, five Democratic lawmakers from the US Senate have expressed serious concerns regarding the financial implications of a stablecoin launched by World Liberty Financial Inc. (WLFI), a cryptocurrency firm backed by former President Donald Trump and his family. In a letter dated March 28, addressed to key regulatory figures, the Senate Banking Committee raised questions about the potential conflicts of interest surrounding the WLFI’s stablecoin, USD1.
The inquiry was directed to Michelle Bowman, chair of supervision and regulation at the Federal Reserve, and Rodney Hood, acting comptroller of the currency. Lawmakers are seeking clarity on how these regulatory bodies intend to oversee WLFI and its USD1 stablecoin amidst discussions over new legislation aimed at regulating stablecoins under the proposed Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
The GENIUS Act, if enacted, would grant the Office of the Comptroller of the Currency (OCC) and the Federal Reserve increased authority to regulate stablecoins, including those issued by companies like WLFI. The urgency of this regulatory scrutiny is heightened by Trump’s recent executive order mandating that federal agencies collaborate with the White House, effectively increasing presidential influence over financial regulation.
Senator Elizabeth Warren, along with her Democratic colleagues, detailed the grave implications of Trump’s financial engagement with WLFI in their letter. They argued that the launch of a stablecoin connected to a sitting president could introduce unprecedented risks to the financial system, potentially compromising the integrity of decisions made by the Federal Reserve and the OCC.
“The launch of a stablecoin directly tied to a sitting President who stands to benefit financially from the stablecoin’s success presents unprecedented risks to our financial system,” the letter states.
Since its inception in September 2024, WLFI has operated with a level of transparency that raises eyebrows; the company’s website indicates that Trump and his family members control 60% of its equity interests. As of mid-March, WLFI had successfully conducted two public token sales, garnering $550 million in funds and confirming the launch of its USD1 stablecoin on the BNB Chain and Ethereum.
Trump’s son, Donald Trump Jr., has actively promoted the USD1 stablecoin, further blurring the lines between political influence and financial investment, which raises additional ethical questions among lawmakers and financial watchdogs alike.
As Congress navigates the complexities of cryptocurrency regulation, the WLFI situation serves as a pertinent case study on the importance of independence in regulatory practices and the potential for conflicts of interest that may arise when financial ventures are intertwined with political figures.
