Authors: LEO SCHWARTZ / BEN WEISS
Compiled and organized by: BitpushNews
The relationship between President Trump and his family with cryptocurrency is becoming increasingly close. The latest example occurred last week when Trump's son Eric Trump announced that the UAE venture capital company MGX would use the stablecoin issued by World Liberty Financial (a blockchain company owned by the Trump family) to pay for its 2 billion dollar investment in the cryptocurrency exchange Binance.
The Trump family and their business partners are expected to profit from this transaction, but the exact amount is difficult to determine due to the lack of transparency regarding the related details. Binance has not responded to requests for comment, and a spokesperson for World Liberty Financial also refused to provide more details beyond publicly available information.
Despite limited information disclosure, (Fortune) has provided an upper estimate of potential profits for the Trump family by interviewing experts in the stablecoin field and analyzing the current cryptocurrency ecosystem.
The business of stablecoins: large and invisible
Stablecoins are the latest component in Trump's expanding cryptocurrency empire, but they have long been an important part of the cryptocurrency industry. Tether, Circle, and later PayPal and Ripple have made a fortune by issuing stablecoins. Tether's revenue reached 5.6 billion dollars in the most recent quarter, and Circle's total revenue for 2024 also reached 1.7 billion dollars.
Because of this, World Liberty Financial issued its own dollar stablecoin USD1 in late March this year. Like most dollar-pegged stablecoins, USD1 is backed by short-term government bonds and other dollar-like assets, typically generating about 4% annualized returns—most of which usually belong to the issuing institution.
If Binance holds USD1, then World Liberty Financial will earn interest on its underlying reserve assets, calculated at 4%, which could yield up to 80 million dollars in a year.
However, this number has a lot of variables. For example, if World Liberty exclusively enjoys all interest income, Binance would have no incentive to hold USD1 long-term and might exchange it for BNB or other income-generating assets.
Additionally, according to a spokesperson, the reserve assets of USD1 include various 'cash equivalents' in addition to government bonds. However, World Liberty has not disclosed the specific asset composition, so there may be cash components that do not generate income.
Omid Malekan, a cryptocurrency scholar at Columbia Business School, pointed out that MGX may not have actually sent funds to Binance; if Binance receives and directly liquidates USD1, World Liberty would not earn any interest. Additionally, Binance may use these USD1 for trading settlements on the platform or employee salary payments.
Edward Woodford, co-founder and CEO of Zero Hash (stablecoin infrastructure provider), also stated, 'Vendors and employees need to be paid, so these tokens may be quickly destroyed.' ('Destruction' refers to exchanging stablecoins for cash with the issuer.)
Could Binance also benefit?
Todd Phillips, a law professor at Georgia State University, pointed out that Binance may have signed some sort of profit-sharing agreement with World Liberty Financial. He noted that Binance had previously reached a similar agreement with Circle, where, in addition to paying a one-time fee of 60 million dollars, they also paid Binance monthly fees for promoting USDC, promising to keep some funds in that stablecoin.
If Binance and World Liberty also have such cooperative arrangements, the latter's profits may shrink significantly, but the liquidity and market visibility of its stablecoin will be significantly enhanced.
Binance previously partnered with stablecoin issuer Paxos to launch BUSD, but that token was halted by regulators at the beginning of 2023. Most of USD1 is currently issued on Binance's own blockchain.
'Why USD1?' Malekan said, 'Perhaps they just gave Binance the best cooperation terms.'
In summary, while theoretically the Trump family could profit 80 million dollars from USD1, this also depends on whether the tokens will be destroyed or if the profits need to be shared.
Democrats strike back: 'Naked conflict of interest'
Regardless of the specific agreement between Binance and World Liberty, Democratic lawmakers have viewed this transaction as new evidence of a conflict of interest between the Trump family and the cryptocurrency industry.
Senior Democratic member of the House Financial Services Committee, California Congressman Maxine Waters, stormed out of a blockchain hearing on Tuesday, protesting that the Trump family is profiting while participating in regulatory legislation.
In a statement sent to (Fortune), she expressed, 'I am extremely concerned that Republicans not only turn a blind eye to Trump's corruption but even help him and his family legitimize their self-serving actions through cryptocurrency.'
This incident has also affected the (stablecoin regulation bill), which originally garnered bipartisan support in Congress. A group of Democratic senators who had previously supported the bill collectively opposed the latest version last weekend due to concerns over Trump's association with USD1.
Massachusetts Senator Elizabeth Warren bluntly stated, 'This is naked corruption, and no senator should support it.'
