Trump-backed stablecoin raises regulatory concerns among lawmakers

A group of US Senators, led by Elizabeth Warren, has voiced concerns over President Donald Trump’s reported ties to the upcoming USD1 stablecoin project.  

The digital asset, backed by World Liberty Financial (WLF), is intended to be pegged one-to-one with the US dollar and supported by short-term Treasury bonds, dollar deposits, and other cash equivalents.  

Lawmakers argue that Trump’s involvement could create conflicts of interest, allowing him to influence federal regulators like the Federal Reserve and Office of the Comptroller of the Currency (OCC) for the benefit of USD1.  

In a letter sent on March 28, the Senators requested clarification from the Fed and OCC on how they plan to manage risks associated with the stablecoin’s approval process.  

“The launch of a stablecoin directly tied to a sitting President who stands to benefit financially from its success presents unprecedented risks to our financial system,” the letter stated.  

The Senators warned that Trump could interfere with regulatory decisions, such as discouraging enforcement actions against WLF or pressuring the Fed to provide liquidity support during market volatility.  

They also highlighted the absence of conflict-of-interest provisions in the GENIUS Act, a bill granting broad authority over stablecoin regulation, which could open doors to regulatory favoritism.  

“[Trump] could attempt to direct the Fed to establish a master account at the central bank for WLF while denying similar support to competitors,” they noted.  

The Senators demanded responses by April 11, outlining key issues such as oversight of WLF’s practices and safeguards against economic manipulation.  

USD1’s launch has sparked debates about transparency and accountability in digital finance as lawmakers seek to ensure regulatory integrity in this emerging sector.