Discussions around the personal enrichment and potential conflict of interest arising from U.S. President Donald Trump’s crypto asset ventures gained steam over the past week. These concerns are slowing not only the progress of the stablecoin legislation but also broader crypto policy. The founder of fintech venture capital fund Launchpad Capital, Ryan Gilbert, told CNBC:
“It’s unfortunate that personal business is getting in the way of good policy…I would hope that everybody in the administration, including the president, gets out of the way of good policy.”
The stablecoin legislation, known as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, aims to establish a regulatory framework for U.S. payment stablecoins.
The bill “is generally perceived to be the legislation that’s gonna be the easiest to get through,” Katrina Paglia, chief legal officer at venture capital firm Pantera Capital, told CNBC earlier this week. Therefore, Paglia was disappointed when the GENIUS Act failed to pass the Senate on Thursday with a 48-49 vote, but was not “surprised.”
Ethical concerns around Trump’s profits from crypto assets and ventures had blocked discussion of the draft U.S. crypto market structure bill scheduled for May 6. The market structure bill was introduced on Monday, aiming to provide much-needed regulatory clarity. The bill aimed to provide clear guidelines on how the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) would classify and oversee digital assets.
The sequence of events that raised conflict of interest concerns
Days before Trump’s inauguration, he launched the official $TRUMP memecoin, whose price spiked to an all-time high of $75 on Jan. 19, according to CryptoSlate data.
The price of $TRUMP fell rapidly after Trump’s inauguration, leading small investors to lose over $2 billion. Meanwhile, Trump-linked companies, which control 80% of the memecoin’s supply, earned around $100 million in trading fees by Jan. 30, Reuters reported in February.
In March, Trump family representatives were reportedly in talks to acquire a stake in the U.S. arm of Binance, which paid a historic fine after pleading guilty to violating anti-money laundering laws in 2023.
On March 13, the Senate Banking Committee passed the GENIUS Act. On March 25, World Liberty Financial, a decentralized finance project linked to the Trump family, announced plans to launch its own stablecoin, USD1.
The investment by Abu Dhabi-based investment giant MGX into Binance was announced on March 12. But on May 1, WLF co-founder confirmed that USD1 was selected to execute the transaction, according to Reuters. MGX is chaired by Sheikh Tahnoon bin Zayed Al Nahyan, the UAE’s national security adviser and a brother of UAE President Sheikh Mohammed bin Zayed. Abu Dhabi’s state-owned $330 billion wealth fund Mubadala, is a partner in MGX.
In late April, Trump invited the top 220 of his memecoin holders to a private audience at a gala dinner on May 22. At the time, Democratic U.S. senator for Georgia Jon Ossoff called the move an “impeachable offense.”
Earlier this week, the Financial Times reported that insiders made nearly $100 million by buying the memecoin of Melania Trump, the U.S. First Lady, hours before its public launch.
Past week intensified tensions around ‘Trump’s corruption’
The GENIUS Act was supposed to sail through. But last weekend, nine Senate Democrats, including four who previously voted for the bill, said they would withhold support if the bill was not revised to address national security and money laundering concerns.
On May 6, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, used the time scheduled to discuss the crypto market structure bill to protest against “Trump’s corruption.” Waters stated that Trump made at least $350 million from his memecoin, adding:
“Trump ran on a campaign to put more money in the pockets of Americans—turns out he just meant his pockets and those of his cronies.”
At the same hearing, Chastity Murphy, senior advisor for financial institutions at the Treasury Department, said Trump’s crypto empire is a vehicle for “influence peddling, bribery, and regulatory capture.” Representative Stephen Lynch asserted that Trump has earned around $2.9 billion—nearly 40% of his wealth—from his crypto ventures.
On May 7, U.S. Senator Mark Kelly introduced the End Crypto Corruption Act to prohibit members of Congress and family members from “issuing, endorsing, or sponsoring crypto assets, such as meme coins and stablecoins.” He noted:
“Trump is cashing in on his presidency and making millions from his own crypto coins—this is corruption in broad daylight.”
In a letter on Friday, Democratic Senators urged Treasury Secretary Scott Bessent and Attorney General Pam Bondi to investigate Trump’s ties to Binance, Bloomberg reported. Meanwhile, former Binance CEO Changpeng Zhao (CZ), who served four months in prison, has requested a pardon from Trump.
Senator Jeff Merkley told CNBC in a statement:
“Currently, people who wish to cultivate influence with the president can enrich him personally by buying cryptocurrency he owns or controls…This is a profoundly corrupt scheme.”
Despite the concerns, Senators from both parties have already started negotiating since the failed vote on Thursday and could vote on the GENIUS Act again as soon as next Monday. Most lawmakers expect the GENIUS Act to eventually pass the Senate and land on Trump’s desk, but the timeline is uncertain amid the conflict of interest concerns.
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