Source: Politico

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

Translation: BitpushNews

The Trump family's latest foray into the crypto business may jeopardize the bipartisan support needed for the Republican Party to ease regulations on the digital asset industry.

Republican lawmakers are eager to push a long-promised crypto legislation and hope to send it to President Donald Trump's desk for signing, which requires Democratic support.

However, a company founded by Trump's sons announced last week that it will launch a new digital currency, a move that may make it harder for Republicans to gain more Democratic backing.

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 U.S. dollar, which could allow members of the Trump family to profit from legislation led by Republicans aimed at legitimizing crypto assets and establishing favorable regulatory rules for the industry.

While several Democratic lawmakers in both chambers of Congress have supported the Republican-led stablecoin bill, the "Trump factor" may pose an obstacle. According to a Democratic aide who wished to remain anonymous, if the legislation does not include provisions banning Trump and Elon Musk from issuing stablecoins, the Democratic chair of the House Financial Services Committee, California Rep. Maxine Waters, is expected to oppose the bill in the committee vote this week.

Democratic lawmakers involved in the congressional crypto legislation negotiations say the Trump family's stablecoin announcement is a hindrance to the legislative process.

"I can't think of anything more damaging to bipartisan cooperation than this," said senior Democratic member of the House Financial Services Committee, Connecticut Rep. Jim Himes. He has previously supported stablecoin legislation and expressed hope to do so again this week.

This concern highlights the challenges of achieving bipartisan cooperation in the Trump era, even on issues like the digital asset industry that have garnered broad attention from both parties. It also illustrates the discomfort that Trump's embrace of cryptocurrency poses for some Republican lawmakers.

Even the staunchest supporters of the industry in Congress acknowledge that World Liberty's latest move could become a barrier to negotiations with Democrats.

"It shouldn't be a problem, but it might be," said Republican Senator Cynthia Lummis from Wyoming, who has played a key role in pushing legislation to support the crypto industry.

Cynthia Lummis

The legislation has garnered bipartisan support and is poised to become the first significant crypto reform bill passed by the U.S. Congress. At least three Democrats in the House have already backed the bill, but concerns from Waters, who has long opposed Trump and criticized his crypto business dealings, could weaken broader Democratic support.

House Financial Services Committee Republican spokesperson Brooke Nethercott stated in a release that the committee "looks forward to continuing to advance our stablecoin work."

"If we want this market to have clear standards, maintaining the status quo is not the answer," she said. "Many members from both parties are working to establish clear regulatory guidelines so that dollar-pegged stablecoins can thrive in the U.S."

While it is generally believed that the Trump family's launch of a stablecoin will not ultimately hinder the Republican Party's ability to pass crypto legislation, it could indeed create political obstacles. Although Democrats have previously expressed concerns about Trump's crypto activities, they ultimately voted in favor of industry-friendly legislation. Supporters of the legislation among Democrats argue that even if the Trump family may benefit from the regulations, there is an urgent need for light regulatory measures regarding digital assets in the U.S.

"You need regulation regardless, but this clearly doesn't help," said New York Democratic Senator and co-drafter of the stablecoin bill Kirsten Gillibrand, commenting on the news of Trump's company launching a stablecoin.

"This makes what should be a serious financial payment system look like a joke," she added.

Republicans closely associated with Trump are unfazed.

"I don't think this is a problem," said Florida Republican Rep. Byron Donalds, a close ally of the president and a member of the Financial Services Committee.

When asked if he was concerned about the World Liberty stablecoin project, the bill's chief sponsor in the House, Wisconsin Republican Rep. Bryan Steil, told reporters that Republicans are "focused on the existing bill text."

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

For a long time, U.S. stablecoin issuers have been lobbying for legislation to clarify the regulatory framework for dollar-pegged tokens. If the bill passes, it would bring new legitimacy to the industry, greatly benefiting them. The legislation under consideration will establish new rules clarifying which regulatory agencies have oversight over stablecoin issuers and what types of reserves these companies need to hold.

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

Zach Witkoff

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

He appeared at the conference alongside several other co-founders of the project, including Zak Folkman, Chase Herro, and Donald Trump Jr. House Financial Services Committee Chairman French Hill and Senate Banking Committee Chairman Tim Scott, both pro-crypto lawmakers, also spoke at the event but participated in other discussion panels.

Donald Trump Jr. stated on-site that he entered the crypto space because he found the traditional financial system to be highly "discriminatory" against conservatives.

"The future has no limits," he said.

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