Senators Warn of Conflicts in Trump's Stablecoin Project

Five Democratic senators, led by Elizabeth Warren, have expressed concerns over the potential conflicts of interest posed by President Donald Trump's involvement in the World Liberty Financial (WLFI) stablecoin project. In a letter dated March 28, the senators addressed Michelle Bowman, the Federal Reserve’s committee chair on supervision and regulation, and Rodney Hood, the acting comptroller of the currency, questioning how regulatory agencies plan to oversee WLFI and its stablecoin, USD1.

The senators' letter comes at a time when Congress is considering legislation to regulate stablecoins through the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. This bill, if enacted, would grant the Office of the Comptroller of the Currency (OCC) and the Federal Reserve authority over stablecoin regulation, including for issuers like WLFI. The senators highlighted the unprecedented risks to the financial system and the integrity of regulatory decisions, given Trump's direct financial stake in the success of the USD1 stablecoin.

The concerns are further amplified by an executive order signed by Trump in February. This order mandates that all federal agencies, including the OCC, consult with and coordinate policies with White House officials, granting the president unprecedented control over regulatory decisions. The senators' letter underscores the unique challenges posed by a stablecoin directly tied to a sitting president who stands to benefit financially from its success.

World Liberty Financial, launched in September 2024, has been shrouded in secrecy regarding its goals. The project's website reveals that Trump and some of his family members control 60% of the company's equity interests. As of March 14, World Liberty had completed two public token sales, raising a combined $550 million. On March 24, the project confirmed the launch of its first stablecoin on the BNB Chain and Ethereum. Donald Trump Jr. also promoted USD1 at the DC Blockchain Summit on March 26, alongside three of WLFI’s co-founders.

The senators' call for regulatory vigilance highlights the need for transparent and impartial oversight to safeguard the financial system's integrity. The potential for conflicts of interest and the erosion of regulatory independence are significant concerns, especially as Congress debates stablecoin legislation. The senators' letter serves as a reminder of the importance of maintaining the independence of regulatory agencies to ensure fair and unbiased decision-making in the financial sector.