US Senators have raised concerns about potential conflicts of interest tied to the launch of USD1, a stablecoin backed by US President Donald Trump’s company WLFi. The $1.6 billion surge in stablecoin reserves has intensified debates over financial integrity, particularly with the US Congress debating the GENIUS Act, which could reshape stablecoin regulation.
The controversy surrounds WLFi’s significant equity stake held by Trump’s family and concerns that a stablecoin tied to a sitting president could compromise regulatory decisions. Critics argue that this could undermine financial system integrity, reminiscent of the 2008 financial crisis.
The GENIUS Act aims to regulate stablecoins, granting the Federal Reserve and OCC greater oversight over issuers like USD1. Lawmakers believe it’s necessary to address risks tied to stablecoins, particularly with Trump’s financial involvement in USD1. A $1.6 billion surge in reserves has raised questions about liquidity management and market manipulation.
Regulators may need to enforce divestment or transparency from WLFi to maintain market confidence. Failing to address these conflicts could fuel market uncertainty. The debate highlights a broader issue – how to regulate stablecoins without stifling innovation.
Source: https://ambcrypto.com/usd1-stablecoin-under-fire-as-u-s-senators-call-out-trumps-conflict-of-interest