Trump's Dual Tokens Plot Crypto's Future

Donald Trump is most likely the biggest celebrity to ever launch a crypto token. Alongside an NFT trading card collection, America’s 47th president has unleashed not just one, but two distinct tickers for crypto degens to ape.

While regulators have released limited information on how they intend to police the crypto industry, careful examination of the unique facts and circumstances surrounding Trump’s two tokens could yield important insights on how his administration will apply policy to digital assets.

Today, we’re unpacking the notable distinctions between WLFI and TRUMP in an attempt to understand how the Trump Administration might regulate crypto tokens. 👇

🏦 What is WLFI?

World Liberty Financial is a Trump family-associated DeFi project. Although an actual application has yet to be deployed, current development plans indicate that World Liberty Financial will be a fork of Aave V3, a popular Ethereum-native cryptocurrency lending market.

Despite the absence of a live protocol, World Liberty Financial has already seen fit to deploy its own token, WLFI, which can be purchased on the Ethereum blockchain and has a total supply of 25B.

While not explicitly disclaimed as a digital asset security, due to the inherent regulatory uncertainty surrounding token sales, only persons exempt from mandatory registration under SEC Regulations D and S (i.e.; accredited U.S. and non-sanctioned international investors) can invest in WLFI.

Additionally, to ensure that tokens do not fall into the hands of investors who do not meet WLFI sale criteria, the token is transfer-restricted, meaning that it cannot be sent between wallets or sold on the public market.

Similar to stock holders, WLFI holders have the right to submit and approve governance proposals that shape the future of World Liberty Financial, and similar to an investment fund, the World Liberty Financial team uses its discretion to conduct treasury management activities.

👱‍♂️ What is TRUMP?

Deployed to Solana on the eve of President Trump’s inaugural crypto ball, the aptly named TRUMP token is a memecoin that bears the Donald’s likeness and last name.

As clearly disclaimed on the TRUMP token’s official website, gettrumpmemes.com, this memecoin is not “an investment opportunity, investment contract, or security of any type.”

Users who visit the TRUMP coin website are instructed to use centralized crypto onramp Moonshot to purchase the token, which requires users to provide personal identifying information for regulatory purposes, but anyone can permissionlessly purchase this digital asset without KYC through popular decentralized Solana exchanges, like Jupiter. 

While President Trump has publicly referenced his associated memecoin, the TRUMP token has neither roadmap nor utility, and its developers have made no promises about providing such functionality at a future date.

⚠️ Profound Implications

Trump’s two tokens come with drastically different purchaser requirements, and while anyone can purchase TRUMP memes, only accredited U.S. and non-sanctioned international investors can partake in WLFI.

Although America’s financial regulators have yet to decree what constitutes a digital asset security, it is a safe bet to assume that Donald Trump – the President of the United States and de facto head of the Securities and Exchange Commission – would not willingly violate applicable securities regulations.

With this framing in mind, the unique set of facts and circumstances surrounding the launch seems to suggest that any token with utility – including governance powers or the rights to cash flows – may be regulated as digital asset securities under the jurisdiction of the SEC.

Conversely, digital asset collectibles, like memecoins, could gain clarity as non-financial products, thus precluding them from regulation and registration requirements.

We certainly don’t have all the answers, but with the Trump Administration having demonstrated eagerness to establish America as the crypto capital of the world and his executive agencies prioritizing feedback on how to apply existing laws to digital assets, it is likely that large swaths of the crypto industry could be subject to securities regulation in the near future.

Although this development risks disrupting the current market equilibrium and would cause some tokens to fall out of favor with investors, regulation is not inherently negative for an industry seeking mass adoption; it stands to unlock an unprecedented era of access and innovation for blockchain technology!

To play ball with the big kids, like the financial institutions who control money and are subject to enormous compliance burdens, the crypto industry must first come into compliance itself.