Republican presidential candidate Donald Trump's plans to launch World Liberty Financial later today could deepen divides among lawmakers in Washington and thwart legislative efforts, investment bank TD Cowen said in a note on Monday.
Trump, who is slated to announce the official launch of the crypto project at 8 p.m. on Monday on X Spaces, has said he is “embracing the future of crypto.”
TD Cowen Washington Research Group's Jaret Seiberg said the project could be a “significant political problem for the crypto sector” if Trump wins in November.
“Prospects for enactment of crypto market structure legislation if Trump wins the election are lower if the Trump family launches World Liberty Financial,” Seiberg wrote. “This is because Democrats will be loath for political reasons to support any bill that is viewed as enriching the Trump family.”
Trump's sons — Donald Trump Jr. and Eric Trump — have been behind the crypto project. The project has shown interest in stablecoins and decentralized finance, but details have been unclear.
The project has also faced some challenges. Last week, Lara and Tiffany Trump's X accounts appeared to have been hacked so that posts promoting a token purporting to be associated with World Liberty Financial could be shared. Both Donald Trump Jr. and Eric Trump have warned against scams or fraudsters pretending to be working for World Liberty Financial or posing as their father.
Top Democrat in the House Financial Services Committee, Maxine Waters, criticized the project last week.
“While decentralized finance, or DeFi, aims to create greater efficiencies and transparency, it can also pose heightened risks of hacks, scams, unequal information and conflicts of interest that can harm consumers and investors,” Waters said. “We've seen this play out in the new DeFi venture that Eric Trump and Donald Trump Jr. plan to launch, called World Liberty Financial.”
Crypto bills in the works
A few bills to rein in the crypto industry are floating around Capitol Hill. In the Senate, lawmakers are working on bills to regulate the crypto industry. Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., introduced a bill in April that would block algorithmic stablecoins while creating a framework for stablecoins. Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., is also working on a bill to regulate crypto, which is expected to be picked back up soon.
On the House side, lawmakers passed a Republican-led crypto market structure bill in May that gives new jurisdiction to the CFTC over “digital commodities” and asserts the SEC would oversee digital assets offered as part of an investment contract. Work has also been underway on a bill to regulate stablecoins.
“Our concern is that the Trump family's launch of a crypto venture will derail the emerging bipartisan view of how crypto should be regulated, which may stymie efforts to establish a crypto regulatory regime,” Seiberg said in Monday's note.
World Liberty Financial could also make crypto policy decisions very partisan, Seiberg added.
“Democrats would accuse Trump of a conflict of interest every time he nominates a regulator with oversight responsibilities, including his pick of an SEC chair,” Seiberg said.