U.S. President Donald Trump's memecoin, Official Trump (TRUMP), could hinder progress on bipartisan crypto market structure legislation, according to investment bank TD Cowen.
"Democrats are going to demand details on whether foreign governments and business interests used token purchases to curry favor with Team Trump," TD Cowen's Washington Research Group, led by Jaret Seiberg, wrote in a note on Tuesday. "This puts at risk the ability to advance the crypto bill with the bipartisan support it will need to become law."
Trump launched the memecoin on Friday, three days before his inauguration on Monday. The token reached a market capitalization of over $14 billion, creating some millionaires within a few days of its launch. However, the TRUMP token has since lost almost half of its value, currently trading at around $42 with a market cap of over $8 billion.
As The Block reported earlier this week, the launch of TRUMP has drawn criticism from both crypto and policy experts. The memecoin "distracts from the greater good," a person involved in crypto policy told The Block. "There already is an insane amount of reputational risk in crypto," they added.
TD Cowen's Seiberg said the memecoin launch complicates Congress's ability to agree on a bipartisan crypto market structure bill, which is critical for resolving the legal uncertainties that limit the crypto investor base. "It is why we are concerned with Trump's decision to issue a memecoin," Seiberg said.
Democrats are expected to scrutinize TRUMP purchases, price surges and Trump family monetization, while Republicans are likely to defend Trump, worsening partisan divides, according to Seiberg. "We also do not expect the Trump family or the Trump administration to cooperate with any Democratic investigations," said Seiberg.
The Trump memecoin has indeed already garnered criticism from California Democrat Rep. Maxine Waters, who also used to chair the House Financial Services Committee. On Monday, Waters said the memecoin "represents the worst of crypto and shows why many regulators, advocates, and policymakers have long been worried." She also showed concerns over a lack of transparency around who is buying the memecoin.
"Through his meme coin, Trump has created a way to circumvent national security and anti-corruption laws, allowing interested parties to anonymously transfer money to him and his inner circle," Waters said. "Buyers could include large corporations, allied nations who are pressed to show their 'respect' for the President, and our adversaries, like Russia and China, which have much to gain from influencing a Trump presidency."
A potential workaround could be separating the memecoin investigation from crypto legislation, allowing other Democratic leaders to lead inquiries and provide cover for those supporting the bill, Seiberg suggested.
Overall, Seiberg is "less concerned" because delays in passing crypto legislation were already likely. Both parties are expected to push finalization to 2026 as they focus on mid-term election campaigns, Seiberg said. This timeline could allow investigations to conclude before legislative voting begins, he added.
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