Five Democratic U.S. Senators have raised alarms over potential conflicts of interest stemming from the launch of USD1, a stablecoin issued by World Liberty Financial (WLFI), a crypto firm partially owned by former President Donald Trump and his family.
Senators' Letter on Conflict of Interest
On March 28, the senators sent a letter to Michelle Bowman, the Federal Reserve’s committee chair on supervision and regulation, and Rodney Hood, the acting comptroller of the currency, demanding clarification on how the agencies plan to oversee WLFI and its stablecoin. The letter was signed by Massachusetts Senator Elizabeth Warren and four other Democrats, who expressed deep concerns over the former president’s financial ties to the project, warning it could compromise regulatory independence.
Trump's Executive Order Raises Concerns
The letter also pointed to Trump's February executive order that directed all federal agencies, including financial regulators, to consult with the White House on policy decisions. Critics argue the directive could give the president direct influence over the Fed and OCC’s stablecoin policies, creating what the lawmakers called an 'extraordinary conflict of interest.' 'The launch of a stablecoin directly tied to a sitting President who stands to benefit financially from the stablecoin’s success presents unprecedented risks to our financial system,' the letter stated.
Trump-Backed WLFI's Rapid Growth
World Liberty Financial has already made significant inroads in the crypto market. According to the firm, it raised $550 million through two public token sales. On March 24, the company launched its USD1 stablecoin on both the BNB Chain and Ethereum. Trump's son, Donald Trump Jr., also promoted the stablecoin during a speech at the DC Blockchain Summit on March 26, standing alongside three WLFI co-founders.
The letter from Democratic senators highlights potential issues with the independence of financial regulation in light of the former president's and his family's involvement in cryptocurrency initiatives. This raises questions about the transparency and fairness of regulating cryptocurrencies in the current environment.
