World Liberty Financial’s Banking Charter Application
World Liberty Financial, the primary cryptocurrency venture owned by the Trump family, is taking significant steps toward intertwining with the traditional banking sector by applying for a national banking charter. This development coincides with a trend in Washington towards more stringent yet legitimizing regulations concerning the management of digital assets.
Application Submission
Recently, World Liberty Trust submitted a de novo application to the Office of the Comptroller of the Currency, the regulatory body overseeing national banks, as reported by the Wall Street Journal.
Potential Impact of the Charter
If granted, this charter would empower World Liberty Trust to issue and manage USD1, a stablecoin backed by the U.S. dollar that the company launched last year. Currently, USD1 boasts a market capitalization of approximately $3.4 billion, partly due to its role in facilitating a $2 billion investment by a third-party investor into cryptocurrency exchange Binance.
Industry Context
This move follows a series of approvals for trust bank charters granted to significant players in the cryptocurrency arena, including BitGo, Fidelity Digital Assets, Circle, Ripple, and Paxos. The Trump administration’s regulatory shift appears to be paving the way for a more integrated involvement of cryptocurrency companies within the banking framework, despite ongoing debates about potential systemic risks associated with trust banks, which differ from conventional banks by generally not accepting deposits or issuing loans.
Company Objectives
World Liberty’s initiative aims to provide cryptocurrency custody and stablecoin exchange services specifically targeted at institutional clients such as exchanges, market makers, and investment firms. Company executives argue that obtaining a banking charter would diminish dependence on outside service providers and accelerate the speed of product innovation.
Controversies and Criticisms
However, the venture has not been without controversy. Critics have raised concerns regarding potential conflicts of interest due to President Trump’s lucrative cryptocurrency enterprises, which are believed to have increased his fortune by over $1 billion, alongside his decision to pardon Binance’s founder, Changpeng Zhao. In response, company officials maintain that the trust has been designed with safeguards against such conflicts, stating that family members of Trump possess only nonvoting shares and lack any operational influence.
