The biggest risk of Trump’s family is not the market but the internal one

Source: Politico

Original title: The Trump family is cashing in on crypto. It's creating problems in Congress

Compilation: BitpushNews

The Trump family 's latest crypto business layout could endanger the bipartisan support the Republicans need to relax regulation of the digital asset industry.

Republican lawmakers are eager to push for a long-committed crypto legislation and hope to send it to President Donald Trump’s desk to sign, so they need Democratic support.

But a company founded by Trump's sons announced last week that it would launch a new digital currency, a move that could make it harder for the Republicans to win more Democratic support.

 Last fall, Trump’s eldest son Eric Trump and Donald Trump Jr. founded a cryptocurrency company called World Liberty Financial.

The new stablecoin launched by World Liberty Financial is a token pegged to the dollar, which could profit members of the Trump family from Republican-led legislation that aims to provide legitimacy for crypto assets and create regulatory rules that benefit the industry.

While several Democrats in both houses of Congress have supported the Republican-led stablecoin bill, the "Trump factor" may become a barrier. Rep. McSheng Waters, the Democratic chief member of the House Financial Services Committee and California, is expected to oppose the bill in a committee vote this week if legislation does not include clauses that prohibit Trump and Elon Musk from issuing stablecoins.

Democratic lawmakers involved in Congress ' crypto legislation negotiations said the Trump family's stablecoin announcement poses a barrier to the legislative process.

“I can’t think of anything more destructive of bipartisanship than that,” said Rep. Jim Himes, a senior Democrat on the House Financial Services Committee. He has supported stablecoin legislation and expressed hope to support it again this week.

This concern underscores the challenge of achieving bipartisan cooperation in the Trump era, even on issues such as the digital asset industry that have received widespread attention from both parties. It also shows the trouble that Trump and his family’s embrace of cryptocurrencies poses to Republican lawmakers in some ways.

Even the MPs who are most steadfast in Congress acknowledge that World Liberty’s latest move could be a barrier to negotiations with the Democrats.

“It shouldn’t have caused trouble, but it could have brought it,” said Cynthia Lummis, a Republican, from Wyoming. She has always played a key role in promoting legislation supporting the crypto industry.

 Cynthia Lummis

The legislation has received bipartisan support and is expected to be the first major crypto reform bill passed by the U.S. Congress. At least three Democrats in the House have supported the bill, but concerns from Waters, who has long opposed Trump and criticized his crypto-business practice, could undermine the broader Democratic support.

Brooke Nethercott, a Republican spokesman for the House Financial Services Committee, said in a statement that the committee "looks forward to continuing our stablecoin efforts."

“If we want this market to have clear standards, maintaining the status quo is by no means the answer,” she said. “There are many members of both parties working to develop clear regulatory guidelines so that the dollar-paid stablecoin can flourish in the United States.”

While it is widely believed that the Trump family’s launch of stablecoins will not ultimately hinder the Republican’s ability to pass crypto legislation, it does create political obstacles. Although Democrats have previously expressed concerns about Trump's crypto behavior, they eventually voted for industry-friendly legislation. Democrats supporting the legislation say the U.S. is still in desperate need of light regulatory provisions for digital assets, even if the Trump family may benefit from the regulations.

"You need regulation anyway, but that obviously doesn't help." Kirsten Gillibrand, a Democratic Senator and co-writtenant of the Stablecoin Act, commented on the news that Trump's company launched a stablecoin.

"This will make a financial payment system that should be serious, look like a joke," she said.

Republicans who are close to Trump do not care.

“I don’t think it’s a problem,” said Rep. Byron Donalds, Republican of Florida. He is a close ally of the President and a member of the Financial Services Committee.

Asked if he was concerned about the World Liberty stablecoin project, Rep. Bryan Steil, Republican of Wisconsin, told reporters that Republicans are "focusing on existing bill texts."

World Liberty's stablecoin, called USD1, will be pegged to the dollar value and is "backed by short-term U.S. Treasuries, dollar deposits and other cash equivalents," according to the company's announcement on Medium. The company also sells another crypto token called WLFI.

For a long time, U.S. stablecoin issuers have been lobbying to introduce legislation to clarify the regulatory methods of US dollar-pegged tokens. If the bill passes, bringing new legality endorsements to the industry, they will benefit greatly. The legislation under review will create new regulations that clarify which regulators have regulatory authority over stablecoin issuers and the types of reserves these companies need to hold.

Last Wednesday, at a major crypto conference in Washington, World Liberty co-founder Zach Witkoff said the company expects the stablecoin market to reach "trillions of dollars" in the coming years.

 Zach Witkoff

"We believe that stablecoins are not only part of crypto, but also an indispensable part of the entire financial ecosystem," he said. His father, Steve Witkoff, was the Middle East envoy appointed by Trump as president.

He took the stage at the conference with several other co-founders of the project, Zak Folkman, Chase Herro and Donald Trump Jr. Pro-crypto lawmakers such as House Financial Services Committee Chairman French Hill and Senate Banking Committee Chairman Tim Scott also spoke at the event, but were part of other discussion groups.

Donald Trump Jr. said on the spot that he entered the crypto field because he found that the traditional financial system was extremely "discriminatory" to conservatives.

" There is no limit to the future," he said.

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