Crypto sector originally supported Trump but is now worried
The cryptocurrency sector previously regarded Trump as a potential ally; however, it now expresses concerns regarding his profit-driven strategy. The recent developments appear to signify a notable achievement for the cryptocurrency sector, which has been striving for broader acceptance. Prominent investors associated with one of President Donald Trump’s crypto initiatives were invited to a dinner at his upscale golf club in Northern Virginia, coinciding with the Senate’s progress on significant pro-crypto legislation and a surge in bitcoin valuations. However, Thursday night’s dinner for the 220 largest investors in the meme coin associated with Trump has prompted unsettling inquiries regarding the possibility of obscure purchasers leveraging internet anonymity to gain access to the president.
Democrats assert that Trump is leveraging presidential authority to enhance profits for his family enterprise. However, even among pro-Trump cryptocurrency supporters, there are concerns that the president’s foray into meme coins is undermining their aspirations to achieve the credibility, stability, and legitimacy they anticipated his administration would provide for their ventures. Following perceptions of being unjustly singled out by the Biden administration, the industry has rapidly emerged as a significant political entity, contributing substantial amounts to support Trump and legislators who favor cryptocurrency. However, this has also resulted in a sometimes uneasy connection between the industry and a president who is leveraging cryptocurrency as a means to generate revenue for his brand in ways that are without precedent.
It is both distasteful and an unnecessary distraction, remarked Nic Carter, a supporter of Trump and a partner at the crypto investment firm Castle Island Ventures, who expressed that the president is suffocating us with his private crypto enterprises. It would be preferable for him to enact legislation grounded in common sense and conclude the matter there. Concerns regarding Trump’s cryptocurrency endeavors have existed since before Inauguration Day. At the upscale Crypto Ball held near the White House three days prior to his inauguration on January 20, Trump declared the launch of the meme coin $TRUMP as a means for his supporters to engage in a lighthearted manner.
Meme coins represent the outliers within the cryptocurrency sector. These assets are frequently established as a form of humor, lacking genuine utility and exhibiting highly volatile price fluctuations that typically benefit a select group of insiders while disadvantaging less informed investors. The president’s meme coin distinguishes itself by offering a specific utility: access to Trump. The top 25 investors of Trump are set to attend a private reception with the president Thursday, with the top four receiving $100,000 crypto-themed and Trump-branded watches.
Trump’s meme coin experienced an initial surge in value, subsequently followed by a significant decline. The price experienced a notable rise following the announcement of the dinner contest. The creators, including an entity under the control of the Trump Organisation, have generated hundreds of millions of dollars through the collection of fees on trades. First Lady Melania Trump has introduced her own meme coin, while Trump’s sons, Eric and Don Jr., who are managing the Trump Organization during their father’s presidency, have announced a partnership with an established firm to launch a cryptocurrency mining venture.
The Trump family possesses approximately a 60 percent interest in World Liberty Financial, a cryptocurrency initiative that represents an additional channel through which investors are engaging and financially benefiting the president’s family members. World Liberty has introduced its own stablecoin, USD1. The project received a significant enhancement recently as World Liberty disclosed that an investment fund in the United Arab Emirates would allocate USD 2 billion worth of USD1 to acquire a stake in Binance, the preeminent cryptocurrency exchange globally.
A rapidly expanding segment of the cryptocurrency market, stablecoins maintain values tied to stable assets such as the US dollar. Issuers benefit from accruing the interest generated by the Treasury bonds and other assets that underpin the stablecoins. The Trump family’s wealth has increasingly been bolstered by their involvement in cryptocurrency. He is evolving into a salesman-in-chief, remarked James Thurber, a professor emeritus at American University with extensive experience in the study and teaching of global corruption. It facilitates the entry of foreign influence with relative ease. The dinner facilitates crypto lobbying and other avenues for engagement. It creates significant conflicts of interest.
The rationale and process behind Trump’s shift in perspective on cryptocurrency. During last week’s trip to the Middle East, Trump expressed his enthusiasm for cryptocurrency while speaking to reporters aboard Air Force One. I have maintained that position since the outset, right from the campaign. That has not consistently been the case. In July 2019, during his initial term, Trump asserted that cryptocurrencies do not constitute money, characterizing their value as highly volatile and fundamentally based on tenuous foundations. Unregulated crypto assets have the potential to enable illicit activities, such as drug trafficking, he noted subsequently. Even after departing from office in 2021, Trump remarked to Fox Business Network that bitcoin, the preeminent cryptocurrency, appears to be a scam.
In May 2024, Trump started to pivot at a cryptocurrency event held at his Mar-a-Lago club in Florida, where he was assured that supporters from the industry would invest significantly in his reelection campaign. In June, a significant event occurred as Trump participated in a high-value fundraising event at the residence of David Sacks in San Francisco. His enthusiasm for the industry grew in the following weeks, particularly after Trump’s meeting with bitcoin miners at Mar-a-Lago. In the subsequent month, he spoke at a prominent cryptocurrency conference in Nashville, pledging to establish the United States as the global hub for cryptocurrency.
Individuals in Trump’s inner circle, such as his sons and billionaire Elon Musk, played a significant role in reinforcing his alignment with the industry. Sacks has assumed the role of the Trump administration’s crypto czar, with several Cabinet members, such as Commerce Secretary Howard Lutnick and Defence Secretary Pete Hegseth, having been ardent supporters of cryptocurrency for an extended period. “I don’t have faith in the dollar,” Transportation Secretary Sean Duffy stated in a 2023 interview. “I hold a positive outlook on bitcoin.”
Numerous prominent supporters of cryptocurrency exhibited a natural skepticism towards conventional politics, yet found themselves drawn to Trump in the previous year. Their discontent was palpable regarding the actions taken by Democratic President Joe Biden’s Securities and Exchange Commission, which has been actively pursuing civil suits against numerous prominent crypto firms. Since Trump took office, numerous cases have been either dropped or put on hold, including one that accused Justin Sun, a China-born crypto entrepreneur, and his company of engaging in market manipulation and compensating celebrities for undisclosed promotions.
Sun, who previously disbursed USD 6.2 million for a work of art featuring a banana affixed to a wall, subsequently consumed the banana, facilitated the Trumps in launching World Liberty Financial with an initial investment of USD 75 million. Sun has disclosed on social media that he is the biggest holder of meme coins associated with Trump and is attending Thursday’s dinner. Sun expressed enthusiasm about engaging with everyone, discussing cryptocurrency, and contemplating the future of the industry.
Are the profits of the Trump family adversely affecting other cryptocurrency investors? Trump has enacted executive orders that advocate for the industry, including proposals to establish a government bitcoin reserve. In March, Trump held the inaugural cryptocurrency summit at the White House. However, several prominent figures within the industry, typically known for their bold and vocal stances, have largely refrained from commenting on Trump’s meme coins and related initiatives. At a recent public event, Coinbase CEO Brian Armstrong remarked, “It’s not my place to really comment on President Trump’s activity.”
In the interim, a significant legislative objective for proponents of cryptocurrency, a bill aimed at elucidating the regulatory framework for digital assets, has progressed in the Senate. However, certain Democrats have sought to impede additional pro-crypto legislation due to the president’s personal engagements. During a contentious House hearing earlier this month, Democratic Rep. Stephen Lynch of Massachusetts remarked that never in American history has a sitting president so blatantly violated the ethics laws. The White House directed inquiries regarding the attendees of the dinner to the Trump Organisation, which did not furnish a list of those expected to attend. According to White House spokeswoman Anna Kelly, the President is focused on negotiating favorable agreements for the American populace rather than for personal gain.
In addition to Sun, several attendees have made public their qualification for the dinner. Another individual of note is Sheldon Xia, the founder of a cryptocurrency exchange known as BitMart, which operates under registration in the Cayman Islands. It is commendable to endorse President Trump’s vision that favors cryptocurrency. Xia utilized both English and Chinese languages in their social media communications. Thurber, an authority on government and ethics, stated that Trump’s personal engagement with cryptocurrency at this dinner benefits the crypto sector. However, it is also fraught with risk, as he indicated, since there exists the potential for significant financial losses for all involved.
