Which conflicts of interest? Trump doubles down on crypto
Trump's plunge into crypto – assets that he once described as a 'scam' – isn't without controversy, even from within the crypto community itself, which backed him in the election with more than $US100 million of donations.
Some of those crypto billionaires are now concerned that the controversies surrounding Trump's holdings will rebound on the industry, just as Trump's backing was about to bring crypto into the mainstream of the US financial system.
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There are obvious conflicts of interest in a president who is ultimately responsible for regulating the sector - and who in March signed an executive order to create a national strategic reserve of bitcoin and other crypto assets - being so deeply invested in the sector. On some assessments, nearly 40 per cent of his net worth (and rising) is now tied up in crypto.
What hasn't dispelled the concerns is that Trump is behaving in a most unpresidential fashion, embracing the conflicts.
He has been spruiking his meme coin on social media – 'I LOVE $TRUMP – SO COOL!!! The Greatest of them all!!!!!!!!!!!!!!!' – promoting the sector and loosening its regulation even as he has become more deeply engaged within it.
More to the point, there have been dealings in his crypto assets that have raised more than a few eyebrows and caused a backlash within Congress.
At a private dinner and tour of the White House last week for a select few guests who had won invitations by becoming one of the top 220 holders of $TRUMP coins was a Chinese crypto billionaire, Justin Sun.
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Sun had been sued by the US Securities and Exchange Commission during the Biden administration for allegedly illegally distributing crypto assets and inflating their value. He was an early investor in World Liberty's tokens last year, investing $US30 million in November and following that up with a subsequent investment of another $US45 million. He's now an adviser to World Liberty.
After Trump regained office, the SEC asked a judge to put the case on hold.
More broadly, the US Justice Department, under the Trump administration, has shut down its national cryptocurrency enforcement team and declared that it's not a digital assets regulator, criticising the Biden administration for a 'reckless strategy of regulation by prosecution.' It has credited a Trump executive order for the shift in approach.
There's another controversy surrounding World Liberty. This month, a state-backed Abu Dhabi investment fund, MGX, announced it would use its stablecoin to make a $US2 billion investment in the crypto exchange, Binance.
That deal will provide credibility and generate significant revenue for World Liberty, which had promoted its stablecoin as an asset that should be attractive to sovereign wealth funds and other government institutions, but also raises some awkward issues.
Binance pleaded guilty in 2023 to money laundering charges and agreed to pay a $US4.3 billion penalty. Its founder and former chief executive, Changpen Zhao, who owns 90 per cent of the platform, served a four-month jail term last year.
He has said that he is seeking a pardon from Trump. The Trump family have also reportedly discussed acquiring an interest in Binance's US business. What a tangled web they weave!
The conflicts in the Trump family's dealings in crypto have derailed what was a bi-partisan consensus on crypto regulation.
Earlier this month, the so-called GENIUS Act, which would have provided a regulatory framework for stablecoins where none currently exists – a bill supported by the crypto sector – was voted down in the Senate because of Trump's perceived conflicts and the potential for crypto assets to be used as conduits for corruption of public officials.
Trump's VIP dinner and tour for buyers of his meme coin may have played a role in the bill's rejection.
Senate Democrats have proposed their own crypto legislation – the 'End Crypto Corruption Act' -- that would ban presidents, lawmakers and their families from issuing or endorsing crypto assets. Even if it passed, Trump could veto it, which would add another layer of conflict.
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Crypto investors and entrepreneurs are uneasy with Trump's dealings because they fear that, on the verge of success after years of lobbying for their preferred legislative and regulatory models, the Trump family has jeopardised their goals with its pursuit of crypto schemes.
Only Trump would see no conflict of interest in his role as president, who with executive orders and sponsorship (or vetoing) of legislation is shaping regulation of the sector in which a growing proportion of his net worth is invested in, or in his control of businesses that are touting for foreign government investment even as he wages trade wars around the world.
He might claim to be at arms-length from the family's crypto dealings because he says his assets are in a trust managed by his eldest son Don Jr, but his repeated promotion of crypto and his meme coin in particular undermines his assertions.
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