Donald Trump’s controversial crypto project World Liberty Financial, which recently raised $14 million in an initial token sale, is considering creating and issuing its own crypto project. stable coinsaid sources close to the matter Decrypt.

Stablecoin, a type of cryptocurrency designed to maintain a stable value and often linked to the U.S. dollar, is still in development and could take some time to launch. The World Liberty team is still determining how to secure the financial product before bringing it to market, a source said.

Meanwhile, the team is simultaneously working on key project components for World Liberty Financial, including the stablecoin, to ensure these features are ready to launch at the right time, another source said.

World Liberty’s recent initiatives point to a possible stablecoin venture. Earlier this month, the project announced that Rich Teo, co-founder of the stablecoin issuer Paxoswill serve as the stablecoin and payment manager for World Liberty.

Teo did not respond DecryptRequest comment on this story. Representatives for World Liberty Financial declined to comment.

While global freedom has already attracted attention, and controversial, for its project to launch a system based on Ethereum borrowing and lending platform Directly associated with the former – and potentially future – president, the prospect of Trump and his business partners issuing their own stablecoin would likely result in both significantly increased risks and the potential to reap even greater rewards.

Stablecoins are a crucial part of the crypto ecosystem. They allow crypto traders to place their funds in digital assets designed to remain fixed at a single price, even when the crypto market fluctuates. They also function as dollar equivalents in markets where dollars are restricted or inaccessible, serving as key on- and off-ramps between cryptocurrencies and traditional financial markets.

To stay true to their name, stablecoins must be heavily collateralized. Circle, the leading US-based stablecoin issuer, says Currently holds $34.59 billion in dollar-denominated assets with regulated US financial institutions to support its $34.37 billion stablecoin, USDCcurrently in circulation.

Other stablecoin projects have attempted to circumvent these fiat collateralization methods, often using crypto as a backing. Most notably, crypto company Terra attempted to peg its stablecoin UST to the US dollar with an algorithm tied to another in-house crypto token. The bet worked for over a year, until the price of UST collapsed to zero in May 2022, wiping out approximately $60 billion in value and devastating the broader crypto market.

The legality of stablecoins remains contested in the United States. The United States Securities and Exchange Commission (SEC) has previously pursued companies like Binance for the issuance of stablecoins, claiming that the tokens constitute illegal and unregistered securities offerings. These stablecoin-related accusations against Binance were, however rejected by a federal judge earlier this summer.

Several prominent federal legislators have reported their intention to pass legislation regarding stablecoins next year – potentially creating a remarkable scenario in which Trump, if re-elected, would control the White House while Congress determines the legality of a financial product that his trading partners intend to offer.

Despite all these potential legal and regulatory conflicts, stablecoins could offer immense benefits to the World Liberty team. Like banks, stablecoin issuers raise liquidity by reinvesting customer deposits in yield-generating products like US Treasury bills. Tether, the company behind the market’s leading stablecoin, USDT, reported a record profit of $5.2 billion in the first half of 2024 alone. The British Virgin Islands-based company currently holds nearly 81 billion dollars in Treasury bills.

Revenue generated from stablecoins could help boost World Liberty’s future plans, but issuing a new stablecoin in an already crowded field is no easy task. Such a venture would require negotiating deals with major crypto exchanges in the industry, such as Coinbase and Binance, to make the asset available to a broad user base. Binance currently has a “strategic business partnership” with First Digital Labs, issuer of the fifth largest stablecoin by market capitalization, FDUSD. Coinbase co-issues USDC, the second largest, with Circle.

However, if Trump were re-elected, he would gain a particularly powerful negotiating position with these exchanges: Binance and Coinbase are currently both targets of prolonged SEC lawsuits threatening their ability to operate.

Trump also has ties to the world’s leading stablecoin issuer. Tether relies on Wall Street asset manager Cantor Fitzgerald to hold “a very large number” of its assets in reserve, according to to Cantor CEO Howard Lutnick. Lutnick currently co-chairs Trump’s transition team.

Getting a collateralized stablecoin off the ground would also require a large amount of capital. World Liberty Financial, which spear Sales of a governance token earlier this month have so far only managed to offload $14.24 million worth of tokens, according to data from Dune. This represents only 4.7% of the $300 million in tokens that the project had reserved for public sale.

Nevertheless, World Liberty Financial plans to take advantage of the Trump brand to emerge as the go-to service for retail investors looking to enter the often opaque world of crypto trading and DeFi. The project has already framed its mission is to “make crypto and America great again by driving mass adoption of stablecoins and decentralized finance.”

Although Trump and his crypto allies are eager marry Despite the benefits of stablecoins in recent months, they have also called out the dangers of a US central bank digital currency (CBDC) – in effect, a stablecoin issued by the US government. The former president repeatedly said sworn prohibit the creation of a CBDC if he is re-elected.

“Such a currency would give the federal government – ​​our government – ​​absolute control over your money,” Trump said at a campaign event in New Hampshire earlier this year.

“They could take your money,” he added. “You wouldn’t even know it was missing.”