American Senators Concerned About Conflicts of Interest Between Trump and the USD1 Stablecoin Project

A coalition of U.S. Senators is expressing serious concerns about the potential conflict of interest related to former President Donald Trump and the upcoming stablecoin project named USD1. This digital currency, backed by World Liberty Financial (WLF), has attracted close scrutiny due to information regarding Trump's relationship with the company behind the project. The group of lawmakers led by Elizabeth Warren warned of the risks associated with Trump's involvement in the approval of USD1. On March 28, a group of lawmakers led by Senator Elizabeth Warren sent a letter to the Federal Reserve (Fed) and the Office of the Comptroller of the Currency (OCC). They requested these two agencies to clarify how they intend to maintain integrity in the supervision and approval of the USD1 stablecoin. This request letter is made in the context of Congress considering the GENIUS Act—a bill that grants broad authority to the Fed and OCC in regulating the stablecoin market. Lawmakers warn that an incumbent president could sign into law a stablecoin project that financially benefits himself while still maintaining control over the regulation of his own financial product. Unprecedented risks to the financial system In the letter, the Senators argued that a President of the United States benefiting directly from a stablecoin overseen by agencies under his supervision is unprecedented and could undermine public trust in the financial regulatory process. "The financial system could be severely affected if a stablecoin is directly linked to a sitting President, whose financial motives are tied to the success of that stablecoin," the Senators warned. The letter outlines several scenarios in which Trump could directly or indirectly influence decisions related to USD1. For example: Trump may intervene in the OCC's evaluation process for the USD1 license application or exert pressure to prevent law enforcement actions against WLF. He may also influence the Fed to provide emergency financial support for USD1 during turbulent market periods, while refusing to support competing stablecoins. Trump could order the Fed to grant official accounts at the central bank for WLF—a crucial privilege for the survival and development of USD1. Lack of mechanisms to prevent conflicts of interest In addition, the Senators emphasized that the GENIUS Act currently contains no provisions to prevent conflicts of interest in cases where the President is directly involved in a stablecoin project. The absence of these protective mechanisms may pave the way for biased behaviors in financial regulations and the risk of economic manipulation. Therefore, lawmakers have requested that the Fed and OCC clarify several important issues, including: The process of approving the stablecoin USD1Ability to provide liquidity support during financial crisesMonitoring WLF's business activities to prevent systemic risksRegulators have until April 11, 2025, to respond. The letter was signed by Senators Elizabeth Warren, Ron Wyden, Chris Van Hollen, Jack Reed, and Cory Booker.