Trump launches digital US dollar – what does that mean?
US president Donald Trump's crypto venture will launch its own USD1 "stablecoin" as it gets serious about crypto.
It's the kind of headline that would have seemed unbelievable just a few years ago, but the Trump-affiliated cryptocurrency company, World Liberty Financial (WLFI), is launching its own US dollar-backed stablecoin.
A stablecoin is a type of cryptocurrency designed to track the value of a regular currency, such as the US dollar or euro, and is mostly used to facilitate trading or digital payments.
The appropriately presidential-sounding "USD1" will be pegged at a 1:1 ratio to the US dollar and fully backed by US treasuries and other cash equivalents, held by custody partner BitGo.
"We're offering a digital dollar stablecoin that sovereign investors and major institutions can confidently integrate into their strategies for seamless, secure cross-border transactions," said Zach Witkoff, World Liberty Financial co-founder, in a statement.
As if this wasn't noteworthy enough, WLFI has chosen to launch USD1 on Ethereum and Binance Smart Chain, the crypto network created by the world's largest cryptocurrency exchange Binance.
Binance's founder and former CEO Changpeng Zhao was sentenced to 4 months in US prison last year after pleading guilty to violating money laundering laws.
Stablecoins play an important role in the crypto markets and are surprisingly lucrative for the companies that issue them.
Tether, the company behind the market-leading USDT stablecoin, made US$13 billion in profit last year.
Whether Trump and WLFI have their eyes on that, or are just serious about legitimising stablecoins in the global financial system remains unknown.
But it means the once crypto-skeptical Trump has now come full circle, and caps off a slew of recent announcements that suggest the Trump family are looking to cement their position in the crypto industry.
Last week, WLFI revealed it had generated US$550 million selling its own $WLFI token.
The Trump Media and Technology Group (TMTG) also announced it would be launching a range of crypto exchange-traded funds in partnership with Crypto.com.
While Trump has remained relatively true to his word in being a pro-crypto president, many in the industry have questioned his real intentions.
The official Trump memecoin crashed and burned, enriching a handful of early investors but bringing the rest of the crypto market down with it.
Since then, his watered-down strategic crypto reserve announcement was met with little enthusiasm.
However, Trump's pro-crypto nominee for chair of the Securities and Exchange Commission (SEC), Paul Atkins, is due to be sworn in on Thursday.
Atkins, who disclosed he has up to US$6 million in crypto-related assets, will likely oversee a dramatic policy departure from his predecessor Gary Gensler, who was aggressively anti-crypto.
Want to invest in crypto?
Start your crypto journey by signing up with an exchange
Ask a question