WorldLibertyFinancial,acryptoprojectconnectedtoformerU.S.PresidentDonaldTrump,planstointroduceastablecoin,accordingtosourcesfamiliarwiththecompany’sdevelopmentstrategy.Followingitsinitialtokensale,whichraised$14million,thecryptoprojectaimstolaunchastablecryptocurrencythatcouldbepeggedtotheU.S.dollar.
DonaldTrumptoLaunchStablecoin
Stablecoins,bydesign,offerusersadigitalassetmeanttomaintainaconsistentvalue,afeatureseenasessentialforsteadytradingamidstcryptomarketvolatility.However,achievingthestabilityrequiredforsuchanassethasposedchallengesformanysimilarinitiatives.
Accordingtoindividualswithknowledgeoftheproject’soperations,creatingasafeandreliablefinancialproductremainsaprimarygoal.Whilethedevelopmentprocesscouldtakesometime,WorldLibertyFinancial’steamisfocusedonensuringthatallmajorprojectfeaturesaresynchronizedandavailablewhenthey’remoststrategicallyviable.
Onesourceexplainedthatworkonthestablecoincontinuesinparallelwithotherelements.Theysaid,“TheteamisworkingconcurrentlyonmajorprojectcomponentsforWorldLibertyFinancial,includingthestablecoin,”accordingtoaDecryptreport.
ArecentannouncementnamingRichTeo,co-founderofPaxos,aprominentstablecoinissuer,astheheadofstablecoinandpaymentoperationsforWorldLibertyFinancialhasfurtherfueledspeculationabouttheinitiative’sambitions.However,Teohasnotcommentedonthematter,andrepresentativesfromWorldLibertyFinancialalsodeclinedtorespond.
TRUMPCRYPTOPROJECTWORLDLIBERTYPLANSTOISSUESTABLECOIN,SOURCESSAY
DonaldTrump’scontroversialcryptoproject,WorldLibertyFinancial—whichrecentlyraised$14millioninaninitialtokensale—hasplanstocreateandissueitsownstablecoin,sourcesfamiliarwiththe…
—*WalterBloomberg(@DeItaone)October28,2024
Nevertheless,theproject’smoveshaveraisedinterestandsparkeddebates,particularlygiventheproject’splansforanEthereum-basedlendingandborrowingplatformwithdirectassociationstoDonaldTrump.
StablecoinRegulatoryLandscape&Challenges
Stablecoinsarenowconsideredanessentialpartofthecryptoecosystemastheyallowuserstoshieldtheirinvestmentsinacurrencylesspronetomarketswings.Also,theyfacilitateconversionsbetweencryptocurrenciesandtraditionalfiatcurrency.However,theregulatorylandscapesurroundingstablecoinsintheU.S.remainsuncertain.
TheSecuritiesandExchangeCommission(SEC)haspreviouslypursuedlegalactionagainstcryptofirms,includingBinance,onthegroundsofallegedlyissuingunregisteredsecuritiesintheformofstablecoins.Althoughthesechargesweredroppedearlierthisyear,apendingdebateinCongresscouldaffectthefutureofsuchassets.
IfDonaldTrumpisre-elected,hemaybeuniquelypositionedtoinfluenceboththeregulatoryandoperationaldynamicsoftheindustry.HemayfacetheCongressonstablecoinlegislationwhilehisbusinesspartnerscontinuetoexpandtheircryptoproducts.
Withpotentialprofitsonthehorizon,therevenuemodelforstablecoinslikethoseenvisionedbyWorldLibertyFinancialisclear.Stablecoinprovidersearnbyreinvestingcustomerdepositsinhigh-yieldproducts,includingU.S.Treasurybills.TheBritishVirginIslands-basedTether,whichleadsthestablecoinmarket,recorded$5.2billioninprofitsinthefirsthalfof2024.
Accordingtoindustryinsiders,stablecoinprojectsrequiresignificantcollateraltosupportapeggedvalue.Circle,aU.S.-basedstablecoinissuer,disclosedthatitholdsover$34billionindollar-backedreservesatregulatedinstitutionstosupportitsUSDCstablecoin.Thus,amidregulatoryhurdlesandheavycompetition,WorldLibertyFinancialmustsecuresupportfrommajorexchangeslikeCoinbaseandBinancetoreachitstargetaudienceeffectively.
Trump’sventuremightgainleverageinnegotiationswithexchanges,giventhatbothBinanceandCoinbaseareembroiledinlegalbattleswiththeSEC,potentiallyaffectingtheirlong-termoperations.Notably,Trump’stransitionteamco-chairisalsotheCEOofCantorFitzgerald,theassetmanagerholdingasignificantportionofTether’sreserves,creatingawebofconnectionsthatcouldaidthelaunchofanewstablecoin.
Meanwhile,Trump’scriticismofaU.S.government-issuedcentralbankdigitalcurrency(CBDC)contrastswithhisendorsementofstablecoins.SpeakingatacampaigneventinNewHampshire,heremarked,“Suchacurrencywouldgivethefederalgovernment—ourgovernment—theabsolutecontroloveryourmoney.”Headded,“Theycouldtakeyourmoney.Youwouldn’tevenknowitwasgone.”
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