Senators Question Trump's USD1 Stablecoin Ties

A group of US Senators has expressed serious concerns regarding a potential conflict of interest involving former President Donald Trump and the forthcoming USD1 stablecoin, a project backed by World Liberty Financial (WLF).

Concerns Over Presidential Involvement in USD1 Approval

On March 28, 2025, a bipartisan group of Senators, led by Senator Elizabeth Warren, sent a letter to the Federal Reserve and the Office of the Comptroller of the Currency (OCC). Their letter questioned how these agencies plan to maintain regulatory integrity concerning the USD1 stablecoin launch, particularly given Trump's reported connections to WLF.

This inquiry comes as Congress considers the GENIUS Act, a bill that would grant significant regulatory authority over stablecoins to the Fed and OCC. The Senators highlighted a critical issue: the possibility of a sitting president influencing legislation that directly benefits a company he has ties to.

“The President of the United States could sign legislation that would facilitate his own product launch and then retain authority to regulate his own financial company,” the Senators noted in their letter.

Unprecedented Risks to Financial Stability

The Senators warned that allowing a former president to profit from a digital currency regulated by agencies potentially under his influence poses a significant threat to financial stability and public trust. They outlined several scenarios where Trump could exert undue influence:

• Interfering with the OCC's evaluation of USD1.
• Discouraging enforcement actions against WLF.
• Pressuring the Federal Reserve for emergency financial support for USD1 during market volatility, potentially to the detriment of competing stablecoins.
• Attempting to direct the Fed to establish a master account at the central bank for WLF.

The Senators emphasized that the GENIUS Act lacks conflict-of-interest provisions to prevent such scenarios. This absence of safeguards raises serious concerns about potential regulatory favoritism and market manipulation.

“The launch of a stablecoin directly tied to a former President who stands to benefit financially from the stablecoin’s success presents unprecedented risks to our financial system,” the letter stated.

Demands for Clarification

The Senators demanded clarification from the Federal Reserve and OCC on several key issues by April 11, 2025, including:

• The approval process for USD1.
• The potential for liquidity support during crises.
• Oversight of WLF’s business practices.

The letter was signed by Senators Elizabeth Warren, Ron Wyden, Chris Van Hollen, Jack Reed, and Cory Booker. This situation underscores the need for robust regulatory frameworks in the cryptocurrency space, a need Codeum addresses through its smart contract audits, KYC verification, and other blockchain security services. Codeum partners with launchpads and crypto agencies to ensure the security and transparency of blockchain projects. Contact us today to learn more.