A new report from Democracy Defenders Fund warns that President Trump’s personal involvement in a Treasury-backed stablecoin creates unprecedented risk to the U.S. financial system, directly entangling a sitting president’s personal financial interests with the stability of the U.S. Treasury market.

Since returning to office, Trump has aggressively promoted the expansion of cryptocurrency. He has loosened enforcement and reshaped regulatory oversight of stablecoins, all while profiting from crypto ventures he and his family control. Through ownership stakes in World Liberty Financial Inc. and CiC Digital LLC, President Trump’s crypto ventures have ballooned by approximately $1 billion since the November 2024 election. World Liberty Financial, launched in Sept. 2024 by the Trump family and other investors, issues USD1, a stablecoin whose reserves are directly or indirectly invested in U.S. Treasury assets. The Trump family has a 75 percent financial stake in the venture.

“The president’s astronomical growth in wealth thanks to crypto is only the tip of the iceberg,” said Virginia Canter, Chief Counsel and Director of Ethics and Anti-Corruption at Democracy Defenders Fund. “The president’s crypto entanglements have left him exposed to the whims of a small number of powerful investors. Decisions those investors make about their stakes in World Liberty Financial could dramatically affect Trump’s personal wealth. And because those investments are tied to Treasury-backed stablecoins, they could also destabilize the U.S. financial system. That is a profound conflict of interest for a sitting president that could make the U.S. financial system vulnerable to foreign adversaries and other bad actors.”

How Disinvestment in World Liberty Financial Could Destabilize Financial Markets

Trump’s conflicts of interest provide critical context for understanding the market risk. Stress in a major stablecoin can quickly spread to the U.S. Treasury market. Stablecoin issuers promise near-instant redemptions while holding assets, such as U.S. Treasuries. If large holders of a stablecoin seek to redeem their investment at once, the issuer must rapidly sell reserve assets to raise cash.

That risk is heightened for USD1 because ownership is highly concentrated. Within weeks of USD1’s launch, a United Arab Emirates-backed investment fund used $2 billion of USD1 to finance a deal with Binance, leaving Binance with control over roughly three-quarters of the stablecoin. In other words, a single private actor has outsized influence over USD1.

If Binance were to redeem USD1 on a large scale, World Liberty Financial would be forced to liquidate significant amounts of its reserve assets, which are heavily invested in short-term U.S. Treasuries or Treasury-linked funds. The report cites academic research warning that rapid Treasury sales, especially in stressed or low-liquidity conditions, could destabilize markets.

What makes this risk unprecedented, the report notes, is that the stablecoin at the center of this dynamic is directly tied to the sitting President of the United States. Trump’s personal financial stake in USD1 creates a conflict in which regulatory decisions, enforcement choices, and crisis response are inseparable from his own private profits.

Trump and His Allies Have Undermined Safeguards

Under the Trump administration, crypto oversight has been weakened across the federal government. The Department of Justice disbanded its National Cryptocurrency Enforcement Team and narrowed its prosecution strategy, effectively shielding crypto platforms from liability for facilitating illicit finance. The Securities and Exchange Commission has dropped or paused enforcement actions against major crypto firms and investors with financial ties to Trump-affiliated ventures. Meanwhile, the GENIUS Act established a regulatory framework for stablecoins without addressing presidential conflicts of interest or imposing robust capital and liquidity requirements.

“The concern that Trump could make decisions based on his own interests rather than the public interest isn’t hyperbole,” Canter said. “World Liberty’s deal with Binance preceded President Trump’s pardon of Binance co-founder Changpeng Zhao, who had pleaded guilty to violations that federal prosecutors said threatened U.S. national security. That’s just one example.”

The report further notes that major foreign investors in Trump-linked crypto tokens have received favorable regulatory treatment, raising serious questions about whether access, enforcement decisions, and presidential powers are being traded for private gain. President Trump’s financial stake in World Liberty Financial creates a uniquely dangerous conflict: a president whose personal wealth draws on stablecoin profits may be disincentivized from enforcing regulations that protect financial stability or from acting decisively to limit the American taxpayers' exposure in a crisis if doing so would harm his own bottom line, the report concludes.

“Never before has a U.S. president had a direct interest in a financial instrument that could disrupt our financial markets,” said Amb. Norm Eisen (ret.), executive chair of Democracy Defenders Fund. “We’re talking personal profit, a foreign government-backed fund that has enriched the president, and weakened oversight. The president’s crypto ventures and ethics conflicts of interest were a five-alarm fire a long time ago. The threat that his investments pose to the stability of our financial system demands immediate scrutiny.”

The report calls for urgent congressional oversight, strengthened capital and liquidity requirements for stablecoins, restoration of crypto enforcement authorities, and clear guardrails to prevent senior government officials from profiting from financial instruments whose volatility could threaten the stability of the U.S. and global economy.

Read the report HERE (PDF)

Read the Trump Crypto Tracker HERE (web)

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Democracy Defenders Fund brings together a nonpartisan team to work with national, state and local allies across the country to defend in real-time the foundations of our democracy.