Sen. Elizabeth Warren and four other Democrats warned U.S. financial regulators they might soon confront “an extraordinary conflict of interest”: overseeing a cryptocurrency entity controlled by the sitting U.S. president and his family.
In a letter sent early Friday to the Federal Reserve’s vice chair of bank supervision, Michelle Bowman, and the acting comptroller of the currency, Rodney Hood, the senators pressed for answers on how they intend to regulate World Liberty Financial, the Trump family’s crypto project, and the stablecoin the company said this week it plans to launch.
Legislation advancing in Congress would create a regulatory framework for stablecoins, which function as digital dollars used widely to store cash or pay for purchases of other crypto assets. It would task the Fed and the Office of the Comptroller of the Currency with oversight responsibilities and specify rules on reserves and customer protections.
The Senate’s measure, the Genius Act, was already working its way through Congress when World Liberty unveiled its plans on Tuesday to issue its own stablecoin, USD1. Earlier this year, President Trump signed an executive order requiring all federal agencies, including financial regulators, to submit their rules and actions to the White House for approval.
The confluence of these events, the senators wrote, “presents an extraordinary conflict of interest that could create unprecedented risks to our financial system.”
“We have received the letter and plan to respond,” a Fed spokesman said. A spokeswoman for the White House declined to comment. An OCC spokeswoman declined to comment.
Stablecoins aim to maintain a 1:1 exchange ratio with government-issued currencies, and store reserves in cash or cash-like assets such as Treasurys to keep the peg in place.
USD1 is the Trump family’s latest foray into crypto through World Liberty, an entity it launched in October as a decentralized finance, or DeFi, project. And World Liberty’s expansion comes as Trump has sought to make the U.S. what he calls the “undisputed bitcoin superpower and the crypto capital of the world.” DeFi is an umbrella term that refers to financial services such as borrowing, lending and trading automated by software rather than human intervention, and that operate outside the mainstream financial system.
