Donald Trump's World Liberty Financial crypto venture will launch a dollar-pegged stablecoin called USD1, which is fully backed by U.S. Treasuries, dollars, and other cash equivalents, ensuring it maintains a value of $1. The announcement follows the company's successful fundraising effort, which raised more than $550 million through the sale of a separate digital token.
Dollar-pegged stablecoins, including Tether and USDC, have surged in popularity, becoming essential in the multi-trillion dollar crypto trading industry by facilitating the transfer of funds between different cryptocurrencies and traditional cash. Currently, stablecoins in circulation exceed $237 billion, according to CoinGecko.
The rise in interest rates has made stablecoins increasingly profitable for their issuers. Tether, the largest stablecoin provider, reported over $13 billion in profits last year.
Zach Witkoff, co-founder of World Liberty, indicated that "sovereign investors and major institutions" would be able to integrate USD1 into their strategies for seamless, secure cross-border transactions. World Liberty has stated that USD1 will be "fully backed by a reserve portfolio audited regularly by a third-party accounting firm," though it did not provide details on the firm or the launch date.
World Liberty was founded shortly before Trump's 2016 election victory, with its establishment announced by Trump, his sons, and wealthy real estate businessman Steve Witkoff, Zach's father, who now serves as Trump's Middle East envoy. Trump, who has emphasized his intention to be a "crypto president," aims to reform U.S. regulations surrounding cryptocurrency and reverse the regulatory crackdown seen under the Biden administration.
The company's crypto interests, which include a digital coin known as $WLFI, have attracted criticism from government ethics experts and political opponents regarding potential conflicts of interest.
Kevin Lehtiniitty, CEO of payments infrastructure firm Borderless.xyz, noted that USD1 would face significant competition from established players like Tether and Circle, the issuer of USDC. He remarked, "While launching a stablecoin is easy, building an ecosystem that adopts it is a far harder task. Is the President competing with other American businesses or will they find ways to partner?"
World Liberty stated that USD1's reserves will be held in custody by California-based BitGo, which will also provide institutional clients with access to deep liquidity and trading. The stablecoin will be launched on the Ethereum and Binance Smart Chain blockchains, with plans to expand to other blockchains in the future.
Binance, the largest crypto exchange globally, introduced its Smart Chain in 2020, which has become the fourth-largest blockchain by asset value, according to CoinGecko. Last year, Binance's founder Changpeng Zhao pled guilty to violating U.S. anti-money laundering laws, resulting in the company paying a $4.3 billion fine following accusations of enabling criminals and failing to report over 100,000 suspicious transactions linked to designated terrorist groups. A spokesperson for Binance did not immediately provide comment on the partnership.