Trump Family Backed USD1 Stablecoin Surpasses $2.1 Billion Market Cap

The Trump administration is advancing significant legislation aimed at regulating the cryptocurrency ecosystem, with a particular focus on stablecoins and Bitcoin. The proposed legislative framework includes the BITCOIN Act, which seeks to establish a Bitcoin Strategic Reserve by directing the government to acquire 1 million Bitcoin (BTC) over five years. This initiative, supported by Senator Cynthia Lummis, aims to utilize existing resources from the Federal Reserve and Treasury to secure these assets without imposing financial burdens on taxpayers.

The GENIUS Act, another cornerstone of this legislative effort, is designed to establish a comprehensive legal framework for dollar-pegged stablecoins. This bill has gained bipartisan support and is poised to address issues such as reserve requirements, transparency, and consumer protection. The Act stipulates that stablecoins must be fully backed by highly liquid assets, ensuring that users can redeem their holdings at any time. It also imposes strict compliance obligations, including anti-money laundering (AML) and counter-terrorism financing (CFT) requirements, to prevent the misuse of stablecoins for illicit purposes.

The GENIUS Act permits only three types of entities to issue payment stablecoins: subsidiaries of banks or credit unions, non-bank financial institutions approved by federal regulators, and state-licensed issuers that meet federal “substantive equivalence” standards. The Act adopts a dual regulatory system, with issuers having a market cap over $10 billion subject to federal oversight, while smaller issuers may be regulated at the state level. All stablecoins must be backed by 100% reserves and can only use highly liquid assets, such as cash, demand deposits, short-term U.S. Treasury securities, and central bank reserves. Customer assets must be strictly segregated from operating funds and may only be temporarily pledged for short-term liquidity purposes.

Issuers are required to disclose reserve asset compositions monthly and undergo audits by certified public accounting firms. Regulators will also establish standards for capital adequacy, liquidity, and risk management. Issuers with a market cap over $50 billion will face stricter audit and compliance standards, and CEOs and CFOs must sign monthly compliance certifications. False statements may lead to criminal liability. Stablecoin issuers are classified as financial institutions under the Bank Secrecy Act and must implement AML and sanctions compliance programs, including transaction monitoring, risk assessments, and filing of suspicious activity reports.

The GENIUS Act also imposes restrictions on foreign issuers and large technology companies, requiring them to meet stringent financial compliance, user privacy, and fair competition requirements. Stablecoin holders will have priority claims on issuer assets in the event of bankruptcy, and the Act prohibits members of Congress and senior executive officials from participating in stablecoin issuance during their term in office. The Act explicitly states that payment stablecoins are not classified as securities or commodities, thus excluding them from SEC and CFTC jurisdiction and providing legal clarity.

As of May 22, the GENIUS Act passed a motion to proceed to debate with 69 votes in favor and 31 against, entering the amendment phase. With the House and Senate rapidly advancing their respective versions of stablecoin legislation and a rare bipartisan consensus on crypto regulation, the Act is widely expected to complete the legislative process by Q4 2024.

USD1, a U.S. dollar-pegged stablecoin launched in March 2025 by World Liberty Financial Inc. (WLFI), a DeFi platform controlled by members of former U.S. President Donald Trump’s family, has gained significant market attention. Each USD1 token is designed to maintain a 1:1 peg to the U.S. dollar and is fully backed by reserves consisting of short-term U.S. Treasury securities, U.S. dollar deposits, and cash equivalents. The project emphasizes regulatory compliance and transparency, with reserve assets regularly audited by a third-party accounting firm and custodied by BitGo, a leading digital asset custody provider. The project’s key figures include Zach Witkoff, co-founder of WLFI, and Eric Trump, Donald Trump's son, who also serves as WLFI’s head.

As of mid-May 2025, USD1’s market capitalization surpassed $2.1 billion, making it the seventh-largest stablecoin. Since its launch in March, USD1 has rapidly expanded across Ethereum, BNB Chain, and more recently, the Tron network. Its most notable real-world application to date is its selection by MGX, an investment firm, as the official stablecoin for a $2 billion investment into Binance, marking USD1’s first major institutional use case.

USD1 has formed strategic partnerships with several ecosystem partners, including BUILDon, StakeStone, and Lista DAO. These partnerships have resulted in significant market attention and price increases for the tokens associated with these projects. USD1 is now supported across various DeFi protocols, enabling its use for trading, collateralization, and liquidity provisioning. On the custody and liquidity side, BitGo is responsible for holding the reserve assets, while BitGo Prime offers institutional-grade liquidity and trading services. DWF Labs has deployed several DeFi liquidity pools for USD1 and has committed $25 million in WLFI token purchases to support the ecosystem. For wallets and consumer applications, USD1 has been integrated into platforms like TokenPocket, HOT Wallet, Pundi X, and Umy, enabling its use in payments, hotel bookings, and merchant settlements within various Web3 scenarios.

Mechanically, USD1 shares many similarities with leading stablecoins such as USDT and USDC. It follows a 1:1 reserve model, backed primarily by U.S. Treasury securities, cash, and other highly liquid assets, with third-party custody and periodic audits to ensure transparency and regulatory compliance. What sets USD1 apart is its unique political brand value. Backed by the Trump family through WLFI, USD1 has experienced exceptionally rapid early-stage growth, most notably being selected as the official stablecoin for MGX’s $2 billion investment in Binance. This momentum is largely driven by the Trump family's public influence and political capital, which has bolstered confidence in the stablecoin's credibility and regulatory soundness.

However, it’s worth noting that the previously launched $TRUMP meme coin, also associated with the Trump name, experienced significant price volatility, raising concerns about its stability and long-term value. This historical context may impact investor confidence in USD1—especially when considering the broader political dynamics that can influence sentiment and risk in the crypto market.

The GENIUS Act represents a broader strategic initiative by the United States to strengthen the international dominance of the digital dollar. By promoting the issuance of compliant, USD-pegged stablecoins, attracting global capital inflows into U.S. Treasury assets, and imposing stricter controls on foreign issuers, the Act aims to enhance both the security and stability of the overall crypto market while mitigating the risk of incidents like the TerraUSD collapse. Against this backdrop, highly compliant stablecoin projects are well-positioned to gain greater market recognition. For instance, USD1, with its strong political and institutional backing, may benefit significantly as the GENIUS Act moves forward. Its ecosystem partners and integrations could play an increasingly important role in the future digital asset landscape.