Concerns over Trump’s conflict of interest are slowing the progress of broader crypto policy

Recent discussions regarding potential conflicts of interest emerging from U.S. President Donald Trump’s involvement in cryptocurrency ventures have intensified over the past week. These concerns are not only stalling the progress of stablecoin legislation but also affecting broader crypto policy initiatives. Ryan Gilbert, founder of fintech venture capital fund Launchpad Capital, expressed his disappointment in an interview with CNBC, stating:

“It’s unfortunate that personal business is getting in the way of good policy…I would hope that everybody in the administration, including the president, gets out of the way of good policy.”

The legislation concerning stablecoins, titled the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, aims to create a regulatory framework for payment stablecoins in the United States.

Katrina Paglia, chief legal officer at Pantera Capital, remarked to CNBC that the bill “is generally perceived to be the legislation that’s gonna be the easiest to get through.” However, she expressed her disappointment when the GENIUS Act was narrowly rejected in the Senate with a 48-49 vote, though she added that she was not entirely “surprised.”

Concerns regarding Trump’s financial gains from cryptocurrency and related ventures have obstructed discussions of another critical piece of legislation—the U.S. crypto market structure bill, which was scheduled for May 6. This bill is designed to provide essential regulatory clarity regarding how the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) would classify and oversee digital assets.

The Sequence of Events Raising Conflict of Interest Concerns

In a controversial move just before Trump’s inauguration, he launched the official $TRUMP memecoin, which peaked at an all-time high of $75 on January 19, as reported by CryptoSlate.

However, the value of $TRUMP plummeted shortly after the inauguration, resulting in small investors collectively losing over $2 billion. Meanwhile, companies associated with Trump, which hold 80% of the memecoin’s supply, reportedly generated around $100 million in trading fees by January 30, according to a February report by Reuters.

In March, it was reported that representatives of the Trump family were in discussions to acquire a stake in the U.S. division of Binance, which had recently paid a hefty fine after pleading guilty to violating anti-money laundering statutes in 2023.

On March 13, the Senate Banking Committee approved the GENIUS Act. Subsequently, on March 25, World Liberty Financial— a decentralized finance initiative linked to Trump’s family—announced plans to launch its own stablecoin, USD1.

An investment from the Abu Dhabi-based firm MGX into Binance was announced on March 12. However, on May 1, WLF co-founder confirmed USD1 had been chosen to facilitate the investment transaction, as reported by Reuters. MGX is chaired by Sheikh Tahnoon bin Zayed Al Nahyan, the UAE’s National Security Adviser.

Further complicating matters, in late April, Trump hosted 220 prominent holders of his memecoin at a private gala, a move that Democratic Senator Jon Ossoff labeled “an impeachable offense.”

A recent report from the Financial Times indicated that insiders had profited nearly $100 million by acquiring Melania Trump’s memecoin mere hours before its public release.

Escalation of Tensions Surrounding ‘Trump’s Corruption’

The GENIUS Act was anticipated to progress smoothly. However, the previous weekend saw nine Senate Democrats, including four who had voted in favor of the bill earlier, indicating they would withdraw their support unless amendments were made to address national security and anti-money-laundering concerns.

On May 6, Congresswoman Maxine Waters (D-CA), the leading Democrat on the House Financial Services Committee, utilized the time allocated for the crypto market structure bill to criticize “Trump’s corruption.” Waters asserted that Trump had made at least $350 million from his memecoin, adding:

“Trump ran on a campaign to put more money in the pockets of Americans—turns out he just meant his pockets and those of his cronies.”

During the same hearing, Chastity Murphy, senior advisor for financial institutions at the Treasury Department, labeled Trump’s cryptocurrency business as a “vehicle for influence peddling, bribery, and regulatory capture.” Representative Stephen Lynch estimated that Trump has amassed approximately $2.9 billion—almost 40% of his wealth—through his crypto endeavors.

On May 7, U.S. Senator Mark Kelly introduced the End Crypto Corruption Act to prevent Congress members and their families from “issuing, endorsing, or sponsoring crypto assets, including meme coins and stablecoins.” He stated:

“Trump is cashing in on his presidency and making millions from his own crypto coins—this is corruption in broad daylight.”

This past Friday, a group of Democratic Senators urged Treasury Secretary Scott Bessent and Attorney General Pam Bondi to investigate Trump’s affiliations with Binance, as reported by Bloomberg. Meanwhile, former Binance CEO Changpeng Zhao, who spent four months in prison, has requested a pardon from Trump.

Senator Jeff Merkley stated, “Currently, people who wish to cultivate influence with the president can enrich him personally by purchasing cryptocurrency he owns or controls…This is a profoundly corrupt scheme.”

Despite ongoing controversies, bipartisan negotiations have resumed since the narrow defeat of the GENIUS Act, with a potential vote on the legislation as early as next Monday. Many lawmakers are optimistic about its eventual passage and reaching Trump’s desk, although the timeline remains uncertain amid the conflict of interest controversies.

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