Days before his inauguration, President Donald Trump unveiled his own cryptocurrency called $TRUMP. The move raised eyebrows among experts in the field as it may entail a conflict of interest or undermine the adoption of the emerging technology.
$TRUMP is a “meme coin,” meaning that, unlike other coins that serve as alternative payment methods, stores of value, or facilitate decentralized finance, the coin’s purpose is purely for speculation on the market.
The biggest concern investors and industry leaders have with the president’s meme coin ventures is his large stake in the coin. It has been reported that Trump owns 80% of the $TRUMP coin, which makes other investors vulnerable to a rug pull. Commonplace in the meme coin world, a rug pull often happens when the founder of the coin holds a large amount of it, gets others to buy and multiply the value of said coins, and then sells his or her coins at a massive profit, which tanks the value, leaving every other investor with worthless coins.
A recent example is when Hailey Welch, a podcaster, launched her own meme coin, $HAWK. Shortly after the coin went viral and exploded in value, she sold her large holdings, costing the rest of the investors millions of dollars. Like $TRUMP and his other meme coin $MELANIA, $HAWK was created on the Solana blockchain.
Trump’s “crypto czar,” David Sacks, is a major proponent of Solana and has admitted to holding a large amount of it.
The meme coins named after the president and first lady have multiplied in price since they were created, and if Trump decided to sell for a big profit, it would hurt thousands of investors. According to Leonard Kostovetsky, associate professor of finance at Baruch College’s Zicklin School of Business, such a move could also damage his reputation.
The only way for Trump to profit from the coins is to sell them, and they are now worth billions of dollars. If he did sell and “pull the rug” on $TRUMP and $MELANIA investors, this could undermine his crypto policies by leaving a sour taste in the mouths of investors and politicians alike.
A large tenet of Trump’s agenda for his second presidential term is to oversee the mainstream adoption of crypto and make the United States the “world capital” of cryptocurrency. He has appointed or nominated numerous pro-crypto officials to his administration, including Sacks as the first-ever crypto czar, Paul Atkins for Securities and Exchange Commission chairman, Howard Lutnick for commerce secretary, and Scott Bessent for treasury secretary.
The Trump administration will make crucial decisions and recommendations on crypto-related issues, such as whether U.S.-based coins, including $TRUMP and $MELANIA, should be subject to capital gains tax and how the government will determine whether a coin should be considered a commodity or a security.
Trump Media & Technology Group, which trades on the NASDAQ under the DJT ticker, is a security by definition. His meme coins, on the other hand, could benefit from being classified as a commodity. It may also be easier for Trump, from a legal and practical standpoint, to exit his $TRUMP and $MELANIA positions than it would be to exit his DJT position.
Trump has already made several crypto-related executive orders, including the establishment of the Presidential Working Group on Digital Asset Markets, the prohibition of central bank digital currencies, and the repealing of SAB 121, which required that banks count the digital assets they hold as liabilities on their balance sheets.
However, the president will need congressional approval for many of his proposed policies, and whether Congress perceives his policies to be self-serving could play a role in how members vote.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The total market capitalization of $TRUMP sits at about $5.5 billion, but earlier in January, it nearly hit $15 billion. $MELANIA, on the other hand, has a total valuation of roughly $400 million but was over $2 billion earlier in the month.
Trump’s entire net worth, prior to the release of his meme coins, was estimated at $6.1 billion as of December 2024.