Discussions about personal enrichment and the risk of conflicts of interest related to President Donald Trump's cryptocurrency asset projects have become the center of attention over the past week. These concerns have not only slowed the progress of stablecoin legislation but have also negatively impacted cryptocurrency policy in general. Ryan Gilbert, founder of the fintech venture capital fund Launchpad Capital, shared with CNBC:
"It's unfortunate that personal interests are hindering the development of sensible policies. I hope that everyone in the administration, including the president, will not stand in the way of good policies."
The stablecoin bill, called the United States Stablecoin Innovation and Guidance Act (GENIUS Act), is designed to create a clear legal framework for payment stablecoins in the U.S.
Katrina Paglia, legal director at venture capital fund Pantera Capital, commented on CNBC that this bill "is regarded as one of the easiest bills to pass." However, she expressed disappointment that the GENIUS Act could not clear the Senate on Thursday with a close vote of 48 in favor and 49 against, although this did not surprise her.
Series of events raising concerns about conflicts of interest
Ethical concerns regarding profits from Trump's cryptocurrency projects have paralyzed discussions about the draft law structuring the cryptocurrency market in the U.S., which was scheduled for May 6. This bill, introduced earlier in the week, aims to provide the necessary regulatory clarity while offering specific guidance on how the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) will classify and oversee digital assets.
Days before Trump's inauguration, he launched an official memecoin called $TRUMP, which reached a record price of $75 on January 19, according to data from CryptoSlate. However, the price of $TRUMP plummeted shortly after the inauguration, leading retail investors to lose more than $2 billion. Meanwhile, companies affiliated with Trump, which control up to 80% of the supply of this memecoin, have earned about $100 million in transaction fees as of January 30, according to Reuters.
In March, reports emerged that Trump's family representatives negotiated to acquire a stake in Binance's U.S. branch – an exchange that faced historical penalties after admitting to violating anti-money laundering laws in 2023. On March 13, the Senate Banking Committee approved the GENIUS Act. By March 25, World Liberty Financial (WLF), a decentralized finance project linked to the Trump family, announced plans to launch its own stablecoin called USD1.
On March 12, Abu Dhabi-based investment group MGX announced its investment in Binance. According to Reuters, by May 1, WLF co-founder confirmed that USD1 was chosen for this transaction. MGX is chaired by Sheikh Tahnoon bin Zayed Al Nahyan, UAE National Security Advisor and brother of UAE President Sheikh Mohammed bin Zayed. Abu Dhabi's $330 billion sovereign wealth fund Mubadala is also a partner of MGX.
At the end of April, Trump invited 220 of his top memecoin holders to a private gala on May 22. Democratic Senator Jon Ossoff from Georgia called this action "an impeachable offense."
Meanwhile, the Financial Times reported that insider investors earned nearly $100 million from purchasing First Lady Melania Trump's memecoin just hours before it went public.
Increasing tension over accusations of Trump's 'corruption'
The GENIUS Act is expected to pass easily, but last weekend, nine Democratic senators, including four who previously supported the bill, announced they would withdraw their support if the bill was not amended to address national security and money laundering concerns.
On May 6, Representative Maxine Waters (D-CA), the Democratic leader on the House Financial Services Committee, used the scheduled time to discuss the cryptocurrency market structuring bill to condemn "Trump's corruption." She stated that Trump has earned at least $350 million from his memecoin and emphasized:
"Trump campaigned with the promise of bringing more money to the American people – but it turns out he was just filling his own pockets and those of his close associates."
During the same hearing, Chastity Murphy, senior advisor at the Treasury Department, argued that Trump's cryptocurrency empire is a tool for "buying influence, bribery, and manipulating regulations." Representative Stephen Lynch stated that Trump has earned approximately $2.9 billion – nearly 40% of his wealth – from cryptocurrency projects.
On May 7, Senator Mark Kelly introduced the Cryptocurrency Corruption Termination Act, aimed at prohibiting members of Congress and their families from "issuing, supporting, or funding cryptocurrency assets such as memecoins and stablecoins." He emphasized:
"Trump is exploiting the presidency to make millions from his cryptocurrencies – this is public corruption."
In a letter sent on Friday, Democratic senators called on Treasury Secretary Scott Bessent and Attorney General Pam Bondi to investigate the connection between Trump and Binance, according to Bloomberg. Meanwhile, former Binance CEO Changpeng Zhao (CZ), who spent four months in jail, has requested a pardon from Trump.
Senator Jeff Merkley stated to CNBC: "Currently, those who want to buy influence with the president can enrich him by purchasing the cryptocurrencies he owns or controls... This is a serious corruption scheme."
Despite numerous concerns, senators from both parties have begun renegotiating after the failed vote on Thursday and may vote again on the GENIUS Act as early as next Monday. Most lawmakers believe the GENIUS Act will ultimately pass the Senate and be sent to Trump's desk, but the specific timing remains unclear amid concerns over conflicts of interest.
Bitwise CIO: Increased risks for cryptocurrency this summer if key bills in the U.S. are not passed.
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