A Five-Alarm Threat to U.S. Financial Stability
A president and a stablecoin could destabilize the U.S. economy.
By Virginia Canter and Christopher Swartz
The stability of the U.S. Treasury market is the bedrock of the dollar’s global dominance. Historically, that stability has always been independent of the personal financial interests of any single person or politician, including the president of the United States. Until now.
Since the fall of 2024, journalists, advocates, and watchdog groups (including our organization, Democracy Defenders Fund) have documented the extraordinary growth of President Donald Trump’s personal wealth through cryptocurrency ventures. Central to that surge is his substantial stake in World Liberty Financial and its Treasury-backed stablecoin, USD1.
Stablecoins are cryptocurrencies that promise a fixed value, typically one dollar, backed by cash or government debt such as U.S. Treasury securities. The president’s stake in the stablecoin industry, which he maintains while overseeing the implementation of legislation such as the GENIUS Act, represents an unprecedented conflict of interest. Of perhaps even greater concern, he is now in the position of holding a direct financial stake in a digital asset whose value and viability are tied to U.S. government debt itself. The risk this poses to the financial system demands serious scrutiny.
Since he entered the 2016 presidential race, Trump has repeatedly touted his personal wealth, often claiming that serving as president prevents him from amassing more of it. During his first term, he failed to divest from his business holdings or place them in a real blind trust, instead transferring day-to-day management to his sons while retaining ownership. Even then, his personal ventures were not directly tied to the foundation of the U.S. financial system.
This time is different. Trump is making deals in broad daylight, openly entwining his presidency with private profit, doing so in part through a financial instrument that not only enriches him personally but is also directly linked to the U.S. Treasury market.
Within weeks of World Liberty Financial launching USD1, a United Arab Emirates–backed investment fund announced it would use $2 billion worth of USD1 to finance a deal with Binance, one of the world’s largest crypto exchanges. The transaction generated immediate revenue for World Liberty Financial, significantly increasing its valuation. Because Trump and his family hold a significant stake in the company, the deal substantially increased the value of their personal holdings.
Meanwhile, the transaction left Binance in control of roughly 75% of USD1’s market capitalization. In practical terms, a single private actor now wields outsized influence over a stablecoin whose reserves are deeply embedded in the U.S. Treasury market and whose performance directly affects the president’s personal wealth. If Binance were to redeem a significant portion of its USD1 holdings, World Liberty Financial would be forced to rapidly liquidate billions of dollars in Treasury-backed assets to meet those redemptions. Academic research and our own analysis show that sudden, concentrated Treasury sales can strain market liquidity and destabilize the broader financial system.
A President with Skin in the Game
Revenue from USD1 is generated through interest earned on the stablecoin’s reserve assets. As long as the stablecoin’s supply remains stable, the Trump family stands to earn tens of millions of dollars annually through its controlling stake in World Liberty Financial.
It is worth pausing to consider the implications. Each year, Trump’s company can reportedly generate up to $80 million in largely passive income as long as USD1 and its reserves remain stable. A president whose personal fortune depends on stablecoin profitability may be reluctant to enforce regulations that limit or constrain risky behavior by major holders of his own stablecoin. In a crisis, he may hesitate to act in the public interest if doing so would undermine his own financial interests. Foreign actors and other special interests who recognize this dynamic may see an opportunity to exert influence over the president or U.S. policy.
There is already one troubling example. The USD1–Binance deal preceded Trump’s pardon of Binance co-founder Changpeng Zhao, who served four months in federal prison after pleading guilty in November 2023 to violating U.S. anti-money laundering laws that prosecutors said threatened national security. The deal also coincided with a broader rollback of crypto enforcement across the federal government, including the dismantling of the Justice Department’s National Cryptocurrency Enforcement Team in April 2025 and the Securities and Exchange Commission’s retreat from major crypto cases involving Trump-linked investors throughout 2025.
Never before has a U.S. president held a direct financial interest in an instrument capable of transmitting system-wide stress into the Treasury market, let alone taken actions to pardon individuals who have a controlling stake in companies that financially benefit him. Not to mention that his appointees have halted investigations into these and other companies that may benefit him. These facts alone should alarm lawmakers, regulators, and citizens across the political spectrum.
Lax, Nonexistent Enforcement and Oversight
The GENIUS Act, which Trump signed into law in July, established a regulatory framework for “payment stablecoins” while exempting them from oversight by the Securities and Exchange Commission and the Commodities Future Trading Commission – without addressing conflicts of interest or imposing robust, uniform capital and liquidity requirements. The law fails to protect the Treasury market or to prevent senior officials, including the president, from profiting from financial instruments tied directly to it.
Since the GENIUS Act’s passage, Trump’s crypto businesses have become even more entangled with foreign governments and more embedded in the financial system. Just this month, an “affiliated entity” of World Liberty Financial announced a deal with the Pakistan Virtual Asset Regulatory Authority to integrate the USD1 stablecoin into Pakistan’s digital asset infrastructure. This month, a World Liberty Financial affiliate filed an application with the Office of the Comptroller of the Currency to establish a national trust bank that would allow it to issue USD1 and provide a broader set of stablecoin services to consumers.
Against this troubling backdrop, it is surprising that Congress has yet to meaningfully address presidential conflicts of interest during the ongoing debate over digital market structure legislation. Congress should conduct immediate oversight, strengthen capital and liquidity requirements for stablecoins, restore crypto enforcement authorities, and establish clear guardrails to prevent senior officials from profiting from cryptocurrency and other financial instruments whose volatility could threaten our financial system.
If lawmakers fail to act, taxpayers and financial markets will bear the cost, not crypto speculators or political insiders.
Virginia Canter is the chief counsel and director of ethics and anti-corruption at Democracy Defenders Fund. Christopher Swartz is senior ethics counsel at Democracy Defenders Fund.
I do have an educational background in economics from a public Ivy league. However, you do not have to have a breadth of, economic and investment knowledge to recognize the blatant public corruption, crony calitalism, WH personal financial self-dealing that is clearly the largest RICO formed by DJT and his cabinet.
We need ongoing recorded investigations, accountability, prosecutions and impeachments. Yes America, they are stealing from all of us, as well as the rest of the world. Support your local & state prosecutors (FAFO) as they go up against thus corrupt DoJ that is only representing the felononious grifter in chief.
This is so depressing. I’m an ordinary citizen with no economics training, so the intricacies of these machinations escape me. But I have feared cryptocurrencies since they first appeared, and I didn’t buy any. Now, even those of us who don’t own them could very well end up being penalized if/when things go south.