Newly established crypto project associated with Donald Trump intends to unveil a native stablecoin. The pursuit could confront legal and ethical implications despite the promise of massive profits.
The crypto initiative by the Grand Old Party (GOP) nominee had realized over $14M from the initial token sale. Sources privy to the matter indicate that Wold Liberty Financial harbors the objective of creating and issuing its own stablecoin.
Trump’s Crypto Project Pursues Stablecoin Issue
The stablecoin involves uniquely designed crypto to hold the steady value that issuers often peg to the dollar. The plans to develop and issue the stablecoins are in the infancy stage and, thus, could take longer to launch.
The team behind World Liberty is still ascertaining how to deliver a safe financial product before presenting it to the market. The team is preoccupied with exhausting the primary project constituents for World Liberty Financial. Such prioritizes readiness for stablecoin features for timely launch.
The recent initiatives by World Liberty signaled that a potential stablecoin venture was in the offing. In particular, earlier this month, the project unveiled Rich Teo to the server as the stablecoin and payment lead for the project.
Teo unveiling is crucial since he is a renowned figure, given he co-founded stablecoin issuer Paxos. However, neither Teo nor World Liberty Financial responded to inquiries about the latest developments.
Controversy in the World Liberty Project
The World Liberty is attracting attention and controversy alike in its plans to unveil an Ethereum-based platform that will facilitate borrowing and lending. Such arises from the direct links with the GOP presidential candidate Trump.
The stablecoin launch is set to yield immense rewards for Trump and business partners. Nonetheless, it will become vulnerable to heightened risks that characterize the stablecoin space.
Stablecoins constitute a critical cog for the crypto ecosystem to gel by allowing the digital assets traders park funds to remain fixed at a single price. Doing so shields traders from crypto market fluctuation.
Stablecoins are dollar equivalents in the markets that restrict access to the dollar. As such, they serve as the key on- and off-ramps for facilitated links between crypto and traditional financial segments.
Achieving stablecoins purpose, as the name suggests, mandates heavy collateralization. In particular, US-based issuer Circle revealed holding $34.59B of dollar-denominated assets at the regulated financial institutions to back the USD Coin (USDC).
Several stablecoin initiatives have attempted to circumvent the fiat collateralization by deploying crypto as reserves. A notable illustration is crypto company Terra pegging the UST stablecoins to the dollar by leveraging an algorithm linked to the in-house token.
The Tera gambit proved viable for 12 months before the UST depegging before the eventual collapse in May 2022. The sudden collapse eroded $60B in value, thus devastating the entire crypto market.
World Liberty stablecoins could encounter legality hurdles posed by the US Securities and Exchange Commission (SEC). The agency has sued Binance, alleging illegal and unregistered securities offerings by issuing stablecoins.
Will World Liberty Stablecoins Succeed in Crowded Space?
The World Liberty stablecoins will face off against the pending stablecoins legislation. Such would pit Trump against Congress when questioning the legality of the financial product.
Stablecoins could generate immense profits for the World Liberty team despite the legal and regulatory challenges that may derail the initiative. Like banks, the issuers reinvest the customer deposits in the yield-bearing products. For instance, USDT realized a $5.2 billion profit by mid-2024, with the company also holding over $80 billion in T-bills.
While revenue realized from the stablecoins could bolster World Liberty’s plans, its issuance in the crowded field is a challenging task. The venture would need brokering deals with the leading crypto exchanges to avail the asset to a broader user base.
World Liberty Financial will likely leverage the Trump brand, which has emerged as the channel for investors seeking entry into the crypto trading and decentralized finance (DeFi) space. The project has reiterated its mission of making crypto and America great through mass stablecoins and DeFi adoption.
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