Original source: Politico
Original translation: BitpushNews
The Trump family’s latest crypto business venture could jeopardize the bipartisan support needed for Republicans to ease regulation of the digital asset industry.
Republican lawmakers are eager to push long-promised encryption legislation to President Donald Trumps desk for his signature, so they need Democratic support.
But a company founded by Trumps sons announced last week that it would launch a new digital currency, a move that could make it harder for the Republican to win more Democratic support.
Last fall, Trumps eldest sons Eric Trump and Donald Trump Jr. founded a cryptocurrency company called World Liberty Financial.
The new stablecoin from World Liberty Financial, a token pegged to the U.S. dollar, could allow members of the Trump family to profit from Republican-led legislation aimed at providing legitimacy to crypto assets and creating regulatory rules that would benefit the industry.
While several Democrats in both chambers of Congress have supported the Republican-led stablecoin bill, the “Trump factor” could be an obstacle. According to an unnamed Democratic aide, California Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, is expected to oppose the bill in a committee vote this week if the legislation does not include a provision prohibiting Trump and Elon Musk from issuing stablecoins.
Democratic lawmakers involved in congressional crypto legislation negotiations said the Trump family’s stablecoin announcement posed an obstacle to the legislative process.
“I can’t think of anything more destructive to bipartisanship than this,” said Rep. Jim Himes of Connecticut, the ranking Democrat on the House Financial Services Committee, who has supported stablecoin legislation in the past and said he hopes to do so again this week.
The concern highlights the challenges of achieving bipartisanship in the Trump era, even on issues as bipartisan as the digital asset industry. It also shows how Trump and his family’s embrace of cryptocurrencies is troubling for some Republican lawmakers.
Even the industry’s staunchest supporters in Congress acknowledged that World Liberty’s latest move could be a hurdle in negotiations with Democrats.
“It shouldn’t be a problem, but it probably will be,” said Republican Senator Cynthia Lummis of Wyoming, who has played a key role in pushing pro-crypto legislation.
Cynthia Lummis
The legislation has received bipartisan support and is expected to become the first major encryption reform bill passed by the U.S. Congress. At least three Democrats in the House of Representatives have supported the bill, but concerns from Waters, a long-time opponent of Trump and a critic of his encryption business practices, may undermine broader Democratic support.
Brooke Nethercott, a Republican spokeswoman for the House Financial Services Committee, said in a statement that the committee looks forward to continuing to advance our work on stablecoins.
“If we want clear standards in this market, maintaining the status quo is not the answer,” she said. “There are members of both parties working hard to develop clear regulatory guidelines so that stablecoins for dollar payments can flourish in the United States.”
While it is generally believed that the Trump familys launch of a stablecoin will not ultimately hinder the Republican Partys ability to pass crypto legislation, it may indeed create a political obstacle. Although Democrats have previously expressed concerns about Trumps crypto behavior, they ultimately voted in favor of industry-friendly legislation. Democrats who support the legislation said that even if the Trump family may benefit from regulations, the United States still urgently needs light-touch regulations for digital assets.
You need regulation anyway, but this obviously doesnt help. Kirsten Gillibrand, a Democratic senator from New York and co-author of the stablecoin bill, commented on the news that Trumps company launched a stablecoin.
It makes a financial payment system that is supposed to be serious look like a joke, she said.
Republicans close to Trump were not impressed.
I dont think its a problem, said Representative Byron Donalds, a Florida Republican and a close ally of the president who sits on the Financial Services Committee.
Asked if he was concerned about the World Liberty stablecoin project, Rep. Bryan Steil (R-Wis.), the bill’s lead sponsor in the House of Representatives, told reporters that Republicans are “focused on the text of the bill that’s already there.”
World Liberty’s stablecoin, called USD 1, will be pegged to the value of the U.S. dollar and “backed by short-term U.S. Treasury securities, U.S. dollar deposits, and other cash equivalents,” according to an announcement posted by the company on Medium. The company is also selling another crypto token called WLFI.
U.S. stablecoin issuers have long lobbied for legislation to clarify how dollar-pegged tokens are regulated. If the bill passes, they will benefit greatly by bringing new legitimacy to the industry. The legislation under consideration would establish new rules to clarify which regulators have oversight authority over stablecoin issuers and the types of reserves these companies are required to hold.
Last Wednesday, at a major crypto conference in Washington, World Liberty co-founder Zach Witkoff said the company expects the market size of stablecoins to reach trillions of dollars in the next few years.
Zach Witkoff
“We believe that stablecoins are not just a part of crypto, but an integral part of the entire financial ecosystem,” he said, whose father, Steve Witkoff, was Trump’s special envoy to the Middle East when he was president.
He was on stage at the conference along with several of the project’s other co-founders, Zak Folkman and Chase Herro, as well as Donald Trump Jr. Pro-crypto lawmakers such as House Financial Services Committee Chairman French Hill and Senate Banking Committee Chairman Tim Scott also spoke at the event but participated in other discussion panels.
Donald Trump Jr. said at the event that he entered the crypto field because he found the traditional financial system to be extremely discriminatory against conservatives.
“There is no limit to the future,” he said.
