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Trump’s Crypto Ties Disrupt Bipartisan Push for U.S. Digital Asset Regulation

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Tensions over Donald Trump’s growing cryptocurrency ventures spilled into Capitol Hill this week, jeopardizing hopes for a bipartisan breakthrough on U.S. digital asset legislation in 2024. A scheduled joint hearing between the House Financial Services and Agriculture Committees was effectively canceled after Representative Maxine Waters objected, citing ethical concerns tied to Trump’s crypto dealings.

Trump’s ventures include $Trump, a meme coin launched in January, and World Liberty Financial, a crypto firm partially owned by him. Both have sparked criticism over potential conflicts of interest, especially given Trump’s vocal support for deregulating the crypto industry and his campaign efforts to attract donations from crypto stakeholders.

Waters accused Republicans of turning a blind eye to what she described as “Trump’s abuse of power”, stating, “I cannot in good faith agree to such a hearing to discuss crypto market structure” under those circumstances. Her objection derailed a session that was expected to shape the first-ever comprehensive U.S. regulatory framework for digital assets.

Republican committee chair French Hill expressed frustration, saying Waters’ move introduced unnecessary partisanship into what had been a bipartisan effort.

The White House responded, with Deputy Press Secretary Anna Kelly asserting there is no conflict of interest, emphasizing that Trump’s assets are managed by his children through a trust. “President Trump is dedicated to making America the crypto capital of the world,” she added.

The controversy casts doubt on the future of other crypto-related legislation, including a key stablecoin bill that would regulate cryptocurrencies pegged to traditional assets like the U.S. dollar. The bill was once seen as a legislative priority, but Democrats are now resisting over concerns about weak anti-money laundering measures and the use of a World Liberty Financial stablecoin in a $2 billion deal with a UAE-based firm investing in Binance.

While Republicans — who hold a Senate majority — may still pass the bill, growing division risks undermining the crypto industry’s narrative that regulation can be a bipartisan success story.

Trump’s World Liberty Financial to Launch USD1 Stablecoin

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Donald Trump’s World Liberty Financial venture announced plans to launch a new dollar-pegged stablecoin, USD1, which will be fully backed by U.S. Treasuries, dollars, and other cash equivalents to maintain a value of $1. The move follows the venture’s successful raise of over $550 million from the sale of a separate digital token, $WLFI.

Stablecoins like Tether and USDC have become crucial players in the crypto industry, with over $237 billion in circulation. These tokens facilitate transactions between cryptocurrencies and provide liquidity in the market. USD1 aims to tap into this growing market and offer “sovereign investors and major institutions” a secure means of conducting cross-border transactions, according to World Liberty co-founder Zach Witkoff.

The reserves for USD1 will be audited by a third-party firm, although World Liberty has not disclosed further details. The stablecoin will initially launch on the Ethereum and Binance Smart Chain blockchains, with future plans to expand to other platforms. The firm also revealed its partnership with BitGo, a California-based custodian, to handle the reserves and provide institutional clients access to liquidity.

Trump’s crypto interests, including the launch of USD1 and a meme coin earlier this year, have raised concerns among ethics experts about potential conflicts of interest, especially as he has pledged to overhaul U.S. regulations on crypto. Despite this, the initiative aims to compete with established stablecoins in the market, such as Tether and USDC.

Trump Family in Talks for Stake in Binance’s US Arm, WSJ Reports

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Representatives of President Donald Trump’s family have engaged in talks regarding a potential financial stake in the U.S. arm of Binance, the world’s largest cryptocurrency exchange, according to a Wall Street Journal report released Thursday. The report also suggested that Binance’s founder, Changpeng Zhao, has been advocating for a pardon from the Trump administration.

In November 2023, Zhao resigned as CEO of Binance and pled guilty to violating U.S. anti-money laundering laws, following a $4.3 billion settlement that resolved a prolonged investigation into the company’s operations. The move marked a significant step for the exchange as it looked to resolve its legal challenges.

According to the Journal, Binance representatives reached out to Trump allies in late 2023 to discuss a potential business arrangement aimed at bringing the crypto giant back to the U.S. However, details about the nature of the potential deal or whether it would be tied to the granting of a pardon remain unclear.

The Trump family has shown a growing interest in the cryptocurrency sector, with cryptocurrency meme coins launched by its members and former President Trump himself holding a stake in World Liberty Financial, a crypto platform. Trump’s recent executive order, which establishes a strategic reserve of cryptocurrencies from government-owned tokens, has sparked controversy due to potential conflict-of-interest concerns, especially as the crypto industry has heavily supported Trump and other Republican candidates financially.

Both Binance and representatives for Trump did not immediately respond to requests for comment.