Lawmakers Question $2 Billion No-Interest Deal Benefiting Trump's USD1 Stablecoin

In a recent congressional hearing, lawmakers raised significant concerns about potential conflicts of interest and financial transparency issues surrounding World Liberty Financial (WLFI), a cryptocurrency firm closely linked to Trump. The hearing focused on a $2 billion no-interest deal that could provide substantial benefits to Trump’s affiliated cryptocurrency, USD1, a stablecoin pegged to the U.S. dollar and supported by U.S. Treasuries and cash equivalents.

Rep. Brad Sherman highlighted the financial implications of this arrangement, suggesting that the no-interest loan effectively acts as an $80 million annual subsidy to Trump and his company’s interests. Sherman’s concerns were echoed by other lawmakers who questioned the transparency of such financial structures and their potential to obscure political favors.

U.S. Treasury Secretary Scott Bessent faced tough questions from the House Financial Services Committee regarding the operations of WLFI. Founded in 2024, WLFI has raised approximately $550 million through its governance token, amidst significant political scrutiny. The firm’s launch of USD1 in March and its subsequent $2 billion deployment by Abu Dhabi’s state-backed MGX have catapulted USD1 to the forefront of the stablecoin market.

The hearing also brought to light several concerning aspects surrounding WLFI, including undisclosed multimillion-dollar “endorsements” and financial arrangements benefiting foreign entities. These revelations have prompted lawmakers to press for comprehensive disclosures regarding stablecoin frameworks and to introduce legislation aimed at enforcing mandatory expense-ratio disclosures for stablecoins. Such measures are crucial to establish much-needed transparency in the rapidly evolving crypto landscape, especially when politically intertwined firms are at play.

Democratic lawmakers have indicated plans to introduce legislation aimed at enforcing mandatory expense-ratio disclosures for stablecoins. This initiative also includes proposals to prohibit no-interest financial structures characterized as effective subsidies. These discussions will likely influence not only the future of WLFI but the regulatory landscape for the entire cryptocurrency sector.

The ongoing scrutiny of World Liberty Financial highlights the imperative for greater regulatory oversight in cryptocurrency markets, particularly concerning entities with political connections. As Congress debates the ramifications of these financial arrangements, transparency and integrity in governmental dealings are more critical than ever. These discussions will likely influence not only the future of WLFI but the regulatory landscape for the entire cryptocurrency sector.