Goodbye USD, Hello USD1.

Trump and Co. take over the banking industry.

On Monday, the GENIUS Act passed a cloture vote in the Senate. It will now almost certainly be passed into law. The law concerns the regulation in the United States of stablecoin, a type of cryptocurrency. Given that only 7% of the American population holds cryptocurrency, this bill will fly under the radar for most people. But it may be the most corrupt action of the second Trump Administration¹.

The crypto industry has been pushing hard to get the GENIUS Act passed, knowing it will lay the groundwork for changing the global financial system. To be sure, the digitisation of the financial world is inevitable, and other governments are already operating heavily in crypto. BRICS nations and countries with CBDCs already use payment systems outside of SWIFT. The United States mustn't cede dominance in the space to other nations and currencies. But when creating a new banking system, how it is regulated and legislated is very important, and how we digitise matters.

While there has been a lot of focus on the $TRUMP coin rug pull, which has become a vehicle for Trump to personally enrich himself by selling political access, there has been relatively less focus on World Liberty Financial and its stablecoin offering. This is by design. In this piece, I will give an overview of the situation to shed more light on what I consider one of Trump's most corrupt acts: The Trump administration is setting up a parallel financial system under private dynastic control by the Trump family and his donors.

The Basics of Cryptocurrency

Most people do not own cryptocurrency. Even fewer, around 1% of Americans, use it for payment, with most people's crypto holdings reserved for investment. Because crypto has been such a fringe issue, now that the industry is making big moves, many people lack the knowledge to understand what is happening entirely.

The ideological centre of cryptocurrency is to free money from its political shackles by shirking the control and interference of the state and banks.

The idea of breaking from the government is not new. Most famously, Friedrich Hayek pushed this idea after the inflation during the 1970s and the collapse of the Bretton Woods system. Like cryptocurrency promoters, Hayek took issue with inflation, instability, government spending, and economic nationalism. Like crypto enthusiasts, his answer was to substitute the government's monopoly on currency with a competitive currency system run by private entities.

Despite claiming to desire a money-free from politics, the cryptocurrencies we see today are extremely political. The aspiration to break from shared provisions and collective self-rule, to a trustless individual system, is a political goal. While they may choose to ignore the libertarian underpinnings, the fact is that power and politics cannot be removed from money. The politics can only be made invisible.

Within cryptocurrency, there are several relationships and requirements that make politics unavoidable. A select group of people design the consensus protocol, a select number of people own the wallets and exchanges, and a select number of people have the infrastructural capacity to mine. There is a significant concentration of cryptowealth, giving the power to radically affect markets where the ruling principle is one dollar, one vote. Inevitably, the system converges into something where a few entities control most of the network. What rises from the ashes of an envisioned break from government is a new government that cannot be checked or changed. A less democratic, less decentralised, and more political replacement to the system so hated before. Just as Hayek's dream of a pure private money was actualised as a bastard system semi-depoliticised technocratic rule that mixed fiat currencies with private credit money, cryptocurrency has not reached anything close to its unachievable ambition.

The idea of creating a way for money to bypass the banks and use technology to eliminate the need for trust actually resulted in a system that is even more reliant on trust.

When I deposit money at Chase, I don't know my banker, nor do I need to trust him. I trust the complex layers of insurance and regulation that have baked trust into the system. I don't need to worry about whether or not I trust my bank; the government worked all that out for me. If someone fucks with the banks or something goes wrong, the bank has insurance, and a host of safety mechanisms protects me.

I am responsible for everything when I start exchanging cryptocurrency, including stablecoins. I need to work out if I can trust every exchange and wallet. I need to "do my own research," and if I lose my money on an exchange, it's my fault.

The world of crypto offers many different products, including a litany of tokens: crypto coins, altcoins, meme coins, stablecoins, non-fungible tokens, governance tokens, and more. Everything you find in the existing financial world has been replicated online. There are wallets, exchanges, assets, blockchains, and banks. These are normally discussed using language such as DeFi and Web3.

The current pieces of legislation in both the House and the Senate relate to stablecoins. Stablecoins are often seen as the bridge between traditional and crypto finance.

Stablecoins

Stablecoins are a form of cryptocurrency designed to have a stable value. Many are pegged to a fixed asset like a fiat currency, which means one stablecoin will have the same value as one fiat dollar from its pegged currency. Stablecoins do not use the existing banking system and are moved on crypto infrastructure instead, meaning that in some areas, particularly international trade, transactions are more efficient. That's why a good, although imperfect, equivalent to stablecoin is a private, digital eurodollar.

As previously mentioned, developing some form of digital currency is unavoidable. Since Trump has outlawed the development of a Currency-Based Digital Currency, operated by the government, privately owned stablecoins are the only real alternative.

Although stablecoins aim to offer a stable value, they have not succeeded. The market is highly volatile, and it is not rare for stablecoins to lose their peg, meaning their value stops being equivalent. Every one of the world's leading stablecoins lost its peg multiple times between 2019 and 2023. There were three major financial events related to stablecoins in the last three years: the collapse of TerraUSD in May 2022 (wiping out $45 billion of capital from the market); the failure of FTX in November 2022 (wiping $9.7 billion of capital from the market); and the failure of the Silicon Valley Bank in March 2023 (wiping $20 billion of capital from the market, after the Fed stepped in to rescue the uninsured depositors).

The global stablecoin market is highly concentrated, with the two most widely used coins being USDT (Tether) and USDC (Circle), which account for 85% of the stablecoin market. Neither of these offerings should be considered stable investments, or anything like a fiat currency. Their track record demonstrates the need for a strong and extensive regulatory framework. The current legislation, which will allow for the widespread adoption of stablecoin use in America, will make it harder for USDT to be used. Meaning that USDC, the stablecoin offering from CoinBase, which also happens to be Donald Trump's most prominent financial backer, will have a monopoly over the market unless a competitor emerges.

On March 25, 2025, the Trump-affiliated crypto platform World Liberty Financial published its own stablecoin, USD1.

World Liberty Financial

Before the 2024 Election, the Trump Family launched their own crypto business, World Liberty Financial. What this business does is not entirely clear, but their stated goal is to make America great again by driving the mass adoption of stablecoins and to bridge traditional and crypto finance. They have stated their intention to create a blockchain-based "credit account system" to decentralise lending and borrowing and extend lines of credit in various digital currencies. At this stage, WLF has only sold governance tokens, accumulated a portfolio of other tokens, and had a limited launch of its stablecoin offering. However, WLF may provide services similar to those of an investment bank, like Charles Schwab, for the crypto space in the future.

The leadership consists of Donald Trump Jr., Eric Trump, Alex, and Zach Witkoff (sons of Steve Witkoff) and their friends Chase Herro and Zachary Folkman (who have a problematic history in the crypto industry). Donald and Barron Trump hold the flattering but unofficial positions of Chief Crypto Advocate and DeFi Visionary, respectively.

World Liberty Financial claims to be a 'DeFi' platform, meaning it is decentralised. In the crypto world, decentralised organisations are not run by a central authority like a board of directors, but are democratically run by those who hold governance tokens (the crypto equivalent of voting shares, kind of). Some organisations are called DAOs (Decentralised Autonomous Organisations), in which token holders vote on proposals (with their votes being recorded on the public blockchain). These are then executed by smart contracts that follow preprogrammed rules.

You don't need me to tell you this, but World Liberty Financial is not decentralised. It is, in fact, a Delaware non-stock corporation owned and controlled by WLF Holdco LLC (which holds $22.5 billion worth of $WLFI tokens), which is owned by DT Marks DEFI LLC, a Trump family business.

While they offer governance tokens ($WLFI), real power is concentrated. The $550 million worth of governance tokens sold so far allows holders to vote on some proposals. However, most of the tokens are owned by Trump organisations, and the outcome of the votes does not need to be honoured. All significant decisions are made by DT Marks DEFI LLC, Axiom Management Group (AMC), and WC Digital Fi LLC. Furthermore, these tokens do not confer ownership rights or a share of WLF's revenue. Instead, WLF retains $30 million of the revenue for operational expenses. The remaining revenue is split with 75% going to DT Marks DEFI LLC (the Delaware based company owned by the Trump family), 12.5% going to Axiom Management (a Puerto Rican based company owned by Chase Herro and Zachary Folkman), and 12.5% going to WC Digital Fi LLC (owned by the Witkoff family). $550 million worth of WLFI tokens have been sold. At this stage, they are not transferable. However, it has been suggested that this may change in the future.

A separate concern is who owns these governance tokens. To avoid SEC registration and oversight from the CFTC and Treasury, $WLFI was initially only offered to those on a white list of non-U.S. persons and accredited U.S. investors. This means that most $WLFI holders are not from the United States. Justin Sun, the owner of the crypto company TRON, who was facing SEC Fraud charges before they were recently dropped, owns $75 million worth of $WLFI and is an official advisor. Recently, the United Arab Emirates pledged to do $2 billion in business in USD1. Mr Witkoff, Mr Folkman and Mr Herro met with the Prime Minister of Pakistan, Muhammad Shehbaz Sharif, and other Pakistani officials to discuss World Liberty Financial.

Zach Witkoff has openly said that World Liberty Financial is targeting the business of sovereign investors and major institutions, intending to integrate WLF's stablecoin, USD1, into their strategies for cross-border transitions. In April 2025, an Emirates-based crypto market maker, DWF Labs, accused of market manipulation by the Wall Street Journal, purchased $25 million worth of $WLFI tokens in a private deal and agreed to provide liquidity for an upcoming "USD1" stablecoin launch.

USD1 - Trump’s Stablecoin

On March 25, 2025, the Trump-affiliated crypto platform World Liberty Financial published its own stablecoin, USD1. USD1 already has a market cap of over $2 billion. The top four fiat-backed stablecoins, in order, are USDT (Tether), USDC (Circle), BUIDL (Blackrock), and USD1 (World Liberty Financial).

The reserve funds for the stablecoin are held by BitGo, a digital asset trust invested in by Crypto Csar David Sacks. Currently, USD1 is issued on the Binance and Ethereum blockchains, with 99% of its supply coming from Binance. Binance is a Chinese blockchain run by a Chinese company fined over $4.3 billion for money laundering.

In December 2024, WLF announced that it would partner with a Portuguese start-up, Ethena Labs, to design its technology. This was paired with a purchase of $5 million worth of Ethena's cryptocurrency. Athena is invested in by Arthur Hayes, a crypto mover who was found guilty of violating the Bank Secrecy Act in 2022. Trump recently granted Mr Hayes a pardon.

The reserve assets for the USD1 Stablecoin are also a cause for concern. Since the launch of USD1, the Trumps have claimed that their stablecoin will adhere to the industry Stablecoin Standard by holding at least 1:1 in reserve assets. That means for every one USD1 they mint, they have the equivalent of one USD in reserves. However, they have been slightly ambiguous about what the assets will be in their reserves. They have said that their reserves will be made up of cash, treasuries and "other cash equivalents", but do not provide further details on what can be counted as a cash equivalent. This is a problem because those assets could have very low liquidity, making it hard to draw on if needed, to get a better interest yield.

Banks need to be able to liquidate their reserves without causing a massive disruption to the market during high-volume redemption events, to avoid systemic failures. This is what went wrong in the banking crisis of 2023. For stablecoin issuers, it should not be enough to simply claim you have the money.

This opaqueness means reserves could be optimised for interest generation instead of security. In 2024, the world's leading stablecoin, USDT (Tether), reported $13 billion in profits. World Liberty Financial will retain all of the interest for USD1, meaning those holding the coin will essentially be providing them with interest-free loans. World Liberty Financial benefits more from investing in higher-yield but riskier assets, even though this isn't in the best interests of its coin holder. Not clarifying what 'other cash equivalents' means puts USD1 holders at significant risk.

Generally, reserve assets are valued daily on a market-to-market basis, but there is no information regarding the frequency or method of their reserve valuations. Given the ambiguity of "other cash equivalents," it would be important for WLF to provide information on how they would deal with fluctuations in the value of their reserve assets, particularly in the case of high-volume redemption events. There is also no information regarding whether or not WLF will retain a buffer of assets beyond 1:1 to safeguard against any liquidity issues.

The GENIUS Act

The GENIUS Act is key to the mainstreaming of stablecoins. Combined with the complete relaxation of SEC enforcement activity, big tech is primed to take over the banking industry.

On February 4, 2025, Senator Bill Hagerty (R-TN) introduced the Guiding and Establishing National Innovation for U.S. Stablecoins ("GENIUS") Act. The Act is co-sponsored by Senate Banking Committee Chairman Tim Scott (R-SC) and Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY).

The bill claims to create "a safe and pro-growth regulatory framework that will unleash innovation and advance the President's mission to make America the world capital of crypto." In reality, it would create a dangerously weak regulatory regime for stablecoins.

Imagine a banking system stripped of all current safeguards and requirements. Now imagine it's controlled by people who run commercial businesses profiting from your spending. That is what the GENIUS Act is paving the way for. It poses significant risks to the economy, the consumer, and national security.

The banking industry, for all its flaws, is regulated. The bill tears through a hundred years of regulation developed in the banking industry. Stablecoin issuers are not bound by the Federal Deposit Insurance Act (FDI Act) and do not require Federal Deposit Insurance, which has been the bedrock of bank regulation and financial risk management since the establishment of the FDIC in 1933 following the Great Depression. It is required by all banks, both federal and state.

It disregards the precendent of the Glass-Steagall Act, the firewall between the banking and commerce industries, allowing big tech and commercial enterprises to create and control an unregulated uninsured banking industry. This will enable these commercial enterprises access to extensive customer data and force consumers to use their stablecoin to make purchases. The Glass-Steagall Act also worked to prevent the excessive concentration of financial, economic, and political power and the heightened risk of contagion between the financial and commercial sectors, increasing the likelihood of a systemic crisis. It is already apparent how stablecoins will work to entrench this power concentration, with the President operating one of the largest stablecoins in the world. The situation will only worsen once organisations such as X, Meta, Amazon, and Apple pursue their own currencies. While much of the Glass-Steagall Act has been repealed, Section 21 of the Act has not. Section 21 prohibits any nonbank entity from engaging in deposit taking. In a recent consideration of stablecoins, Professors Howell Jackson and Morgan Ricks confirmed “the legislative history of section 21(a)(2) confirms that the provision was intended to prohibit {…} unregulated private banking so far as practicable.”

The GENIUS Act allows these organisations to engage in high-risk activities prohibited by traditional banks and financial services. This bill will allow stablecoin reserves to include repos and reserve repurchase agreements (reverse repos) with private sector counterparties. These are collateralised loans from private sector counterparts such as hedge funds and proprietary trading firms, which have large stores of illiquid assets and do not have access to emergency liquidity support from the Fed. Stablecoin reserves will also be allowed to be held in the form of money market mutual funds (MMMFs). That means two types of unstable, short-term financial loans would be allowed to make up reserves. There is some prohibition on rehypothecation of reserves, however this can be waived with permission. Given that Donald Trump controls the permission structure, this is a problem.

The failure of a single large stablecoin issuer could trigger a systemic run on the entire stablecoin industry. The Fed would be forced to step in and save the non-bank issuers (who do not have FDIC Insurance) under Section 13(3) of the Federal Reserve Act, 12 U.S.C. § 343(3), which allows loans to non-banks in "unusual and exigent circumstances." This creates a precedent for crypto companies to privatise profits and socialise losses.

To be clear, the GENIUS Act allows for the creation of unstable, uninsured, highly runnable short-term financial claims. It creates a world where private money will be rescued at a public cost.

Stablecoins are not permitted under the GENIUS Act to pay interest. If separate legislation or an amendment allowed interest payments, it would make stablecoins an investment option as well as a payment mechanism. This could cause people to pull their money from the federally insured depository institutions and put it into stablecoins, causing significant issues for Main Street. The impact on the ability of FDIC-Insured banks to attract and retain deposits would undermine their ability to perform their roles as intermediaries between depositors and borrowers. Essentially eliminating their ability to provide loans. Stablecoin issuers are not permitted to issue consumer loans, causing a significant problem for the market. When MMFs drew dollars away from federally insured banks in the 70s and 80s, it resulted in the failure of almost 3000 financial institutions and cost the taxpayer nearly $200 billion. It would also have implications for larger monetary policy. Yield-bearing stablecoins should remain an area of concern.

Finally, it is widely accepted that cryptocurrencies, even stablecoins, are the chosen payment method for criminals. Organised crime, terrorist organisations, and money launderers all use cryptocurrency as their primary method of financing, with the number one global stablecoin, Tether, being famous for its exploitation by criminal networks. Mainstreaming stablecoin with such little regulation makes it easier for criminal and terrorist organisations to do their business in the United States and creates an easy mechanism to launder money.

Tech (and Trump) Eat The Fed

The plan is obvious. Trump and his Big Tech backers are here to take over the global financial system from commercial banks to central banks to SWIFT. The plan is to slowly but surely make the existing system irrelevant, usurping government control for their own. In 2025, the projected net interest income of the banking sector was US$632.11 billion. That will soon belong to the big tech industry. A parallel monetary system under private dynastic control is being set up, with Donald Trump at the helm, with the assistance of the American Congress.

Congress is paving the way for Big Tech to print money and create their own global currencies by approving the GENIUS Act. This is all done under the tenuous and debated suggestion that stablecoins pegged to USD will reinforce the dollar. However, when these private monetary networks are established and entrenched, they will not only threaten the banking sector and the dollar but also threaten the political stability of states as a whole.

After pushing back against the bill, 16 Democratic Senators flipped to help the bill pass cloture. The votes came from: Kirsten Gillibrand (D-NY), who co-sponsored the bill, Adam Schiff (D-CA), Angela Alsobrooks (D-MD), Mark Warner (D-VA), Ruben Gallego (D-AZ), John Fetterman (D-PA), Cory Booker (D-NJ), Catherine Cortez Masto (D-NV), Ben Ray Luján (D-NM), Elissa Slotkin (D-MI), Maggie Hassan (D-NH), Martin Heinrich (D-NM), Jon Ossoff (D-GA), Alex Padilla (D-CA), Jacky Rosen (D-NV), and Lisa Blunt Rochester (D-DE). While these Senators should be primaried for their complicity, there is some speculation as to why they flipped their votes. It has been reported that the chief of staff of Senator Gillibrand, the bills co-sponsor, invoked her role as chair of the campaign arm of the Democratic party going into 2026. This was done to suggest that campaign support could be tacitly linked to how senators voted on the bill. Gillibrand has long been an ally to the crypto industry, receiving over $217,000 in campaign support from Coinbase, Ripple, Uniswap Labs, Andreessen Horowitz, and dYdX Trading.²

Under our noses, big tech has purchased political access and used that political access to ascertain financial dominance. Slowly but surely, regulation has been undone, oversight has been dismantled, and regulation has been rolled back.

All of the Ethics oversight bodies, from the SEC to the Office of Government Ethics, have been gutted, meaning there is no one to stop this. The independence of the Federal Reserve via Wilcox v Trump, citing Humphreys Executor v the United States) is being challenged³, and Trump has noted that conflict of interest laws do not apply to him and that he has broad immunity for official actions he takes as President.

Goodbye USD, Hello USD1.

1. With the complicity of 16 Democratic Senators.

2. There is the kinder explanation, that these Senators understand the use case when it comes to Stablecoins, That because they are highly efficient, America should work to create a framework for their use. However, as Senator Warren says, this weak bill is worse than no bill.

3. The Supreme Court has recently signalled that they intend to protect the Fed, however this does not eliminate the intent of the Administration. It seems that the Administration expect Michelle Bowman to act in alignment wth them,