Treasury Department regulators have granted World Liberty Financial, the Trump family-linked cryptocurrency enterprise, conditional approval to begin operating as a federally chartered trust bank. The status change provides “new powers and federal credibility” to an enterprise in which the Trump family retains a “substantial financial interest,” said Politico. But the prospect of Trump administration officials clearing a regulatory path for the president’s family businesses has many Democrats and ethics groups warning against corruption on a massive scale.
‘Pretty unprecedented’ arrangement
The preliminary approval for the Trump family’s “flagship crypto venture” allows World Liberty to “issue, redeem and safeguard USD1,” the “dollar-backed stablecoin” introduced by the firm last year, said The Wall Street Journal. USD1 is currently “custodied” with financial services provider BitGo, and has a market value of “about $4 billion.”
After relying on BitGo’s third-party services to “provide a stable digital currency,” said ABC News, World Liberty can “cut out the middleman and provide the service directly.” This marks the “first time in U.S. history” that a business “owned by the sitting president’s family has been granted bank status.”
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The arrangement is “pretty unprecedented,” said New York University Stern School of Business Professor Austin Campbell to CBS News. There is now an “awkward situation” in which the Treasury Department’s Office of the Comptroller of the Currency (OCC) will need to “police World Liberty, which has an affiliation with the president’s family.”
While World Liberty “won’t be able to take deposits or make loans,” said CNN, critics warn this could be a “new wrinkle on the classic case of the fox guarding the henhouse.” Moving forward, “corporations and foreign actors” will have a “new way to stealthily curry favor with the White House.”
‘Brazen act of self-dealing’
Although Washington has been “in knots” over the “steady drumbeat of news” regarding Trump’s expanding businesses during his presidency, the World Liberty decision “stood out to many,” said Politico. Critics call the arrangement “one of the clearest examples” of the conflicts of interest federal officials face as they “weigh the wishes of Trump family-backed companies.”
Trump is now the first ever president to “approve, operate and supervise his own bank” in the “most brazen act of self-dealing our financial system has ever seen,” said Sen. Elizabeth Warren in a statement. “Congress cannot allow it to stand.” To that end, Warren and a group of Democratic Senators have introduced the Ending Presidential Corruption in Banking Act, a bill that would ensure no high-ranking government official or their families can “exploit their positions to own or control a bank, which could serve as a major vehicle for corrupt dealings.” Democrats will “likely probe the OCC’s approval of the World Liberty bank charter” should the party “regain control of Congress” in the coming year, said Politico.
