Written by: FinTax
1. Rising Star: USD1's Rapid Expansion
At the beginning of this year, WLF announced plans to launch the institution-oriented stablecoin USD1. USD1 is pegged to the value of the dollar at a 1:1 ratio, with asset reserves consisting of cash, U.S. Treasury bonds, and equivalents. The asset custodian is BitGo, and the accounting firm Crowe LLP issues monthly reserve verification reports. The industry generally believes it has high transparency and credibility. USD1 was officially issued in early March, with an initial supply of 3.5 million USD. As of now, its market capitalization has exceeded 2.7 billion USD, ranking seventh among stablecoins.
(Figure 1: Stablecoin Market Capitalization Rankings. Source: CoinGecko)
USD1 has attracted attention since its inception and has rapidly risen in recent months due to its advantageous background. USD1 is almost entirely issued on the BNB chain. According to BscScan data, the supply of USD1 issued on the BNB chain has reached 2.1 billion USD, accounting for over 99% of its total circulation, while the Ethereum version, according to Etherscan data, only has 14.5 million USD. Subsequently, major public chains with large transaction shares, such as Tron, have launched USD1 to meet the capital demand on their chains. In just a few months, USD1 was listed on mainstream exchanges like Binance, Bitget, and Bybit, quickly entering multiple on-chain ecosystems.
(Figure 2: Comparison of USD1 on the BNB Chain (BEP-20) and Ethereum (ERC-20). Source: BscScan, Etherscan)
The rapid expansion of USD1 is inseparable from the support of major exchanges. Binance was the first to launch USD1 in April, and then PancakeSwap increased its exposure through events. Related memecoins quickly swept the market, such as $B, which broke $400M in just ten days, sparking another wave of excitement on the BNB chain. Bitget and Bybit subsequently launched USD1 in June and July, respectively, and introduced airdrops and reward programs, further opening up liquidity and user entry points.
2. Political Elements: The Controversy Surrounding USD1
While focusing on the product design of USD1, users have also developed a strong interest in USD1's political background. It is well known that USD1 comes from WIF, which is backed by the rising Trump family. Therefore, one of the biggest features of USD1 is its deep binding with the Trump family, which may also explain why USD1 has such strong market mobilization capabilities, even prompting the Abu Dhabi Investment Fund MGX to choose to use about 2 billion USD1 to invest in Binance. The resources of the Trump family, coupled with the backing of international capital, allowed USD1 to gain a growth environment different from the vast majority of stablecoins from the very beginning.
However, as the circulation of USD1 has skyrocketed, more and more people, including politicians, have begun to question whether the Trump family is using their political position to gain commercial benefits. For instance, several senators from the U.S. Senate Banking Committee have sent an open letter to regulators, demanding a review of the compliance and potential conflicts of interest surrounding USD1. They believe that if the presidential family directly profits from the stablecoin business, the independence of regulatory agencies may be severely compromised.
In fact, these concerns are not unfounded. The sensational memecoin $TRUMP that emerged earlier this year also raised similar questions. At that time, the token was considered a potential means to bypass campaign finance regulations, becoming an important channel for the Trump family to obtain opaque profits or even political bribes. Although USD1 and Trump Coin differ significantly in positioning and nature, they share a similar core issue: Is the Trump presidential family gaining additional political or economic advantages through the cryptocurrency market? Some media have pointed out that the collaboration between USD1 and Binance may involve more exchange of benefits, as Binance has long faced scrutiny from U.S. regulatory authorities, and Binance has been particularly proactive in promoting USD1. There are widespread concerns that this practice may turn stablecoins into tools for politicians to extract rents, further increasing regulatory difficulties and undermining social fairness.
Currently, the U.S. Congress is promoting the implementation of new stablecoin laws and more regulatory rules for crypto assets. Whether USD1 can successfully obtain and maintain compliance will directly impact its long-term development. Especially in the context of bipartisan struggles, some legislators may propose special restrictions on the Trump presidential family's operations with crypto assets. As a 'canary in the coal mine', USD1 faces certain political uncertainties and compliance risks.
Despite several controversies, USD1 still provides cryptocurrency investors with more optional trading mediums and creates a more convenient market environment, increasingly favored by investors.
